Godrej Appliances is on an exponential expansion spree of its EBOs. The company is planning to expand its number of EBOs from 45 to 200 by the end of fiscal 2017-18 in tier II and III cities. These EBOs will be opened by the associated dealers of the company. The company is also in process of enhancing its eCommerce presence while projecting to earn 8 percent of the total revenue from eCommerce. Divulging retail expansion plans of the company, Prasoon Kumar, Vice President- Sales Godrej & Boyce Mfg. Co. Ltd talks to Indianretailer.com.
What are the retail expansion plans of Godrej Appliances?
Started with 13 EBOs, currently we have around 45 EBOs which we want to exponentially expand to 75 EBOs by February 2017 and around 200 EBOs by the end of fiscal 2017-18 across tier II and III cities in the country. During November this year to February 2017 we will be engaging in massive expansion. Launched by our associated dealers, each EBO will be of 1000 to 2000 sqft in size. As EBO is our main focus as we are looking for new dealers who want to get associated with Godrej.
What will be the investment per store for each dealer?
There will be two parts of investments, one is in the property and second is in the stocks. The property investment will vary according to the location, while the stock investment will be around Rs 25 - 30 lakhs. Godrej will support in terms of setting up furniture for keeping the products. These will be the stand alone stores under the name Godrej Appliances and dealers can easily make 24 percent of ROI from each of the store annually.
Will you be integrating EBOs with eCommerce service providers? We will connect these EBOs with all our ecommerce partners. We have understanding with Flipkart, so whatever gets dispatched, it will be done through our EBOs. With this, consumer can order online and pick from our EBOs as well.
EBOs are contributing close to five percent of our total revenue and from distribution network we get around 60 percent of the revenue.
What is the traction at your own e-commerce platform?
We have our ecommerce portal which is doing very little business. It is in the process of renovation and it will be done in a year or so. Simultaneously, we will also launch our own app. Our eCommerce platform will showcase all Godrej products.
Presently we are supplying to around 20,000 pin codes and only 2-3 percent of our revenue comes from the ecommerce side. Further we are aiming to get at least 8 percent of our total revenue from the e-commerce side.
With technological penetration how will you observe the changing consumer behaviour?
Consumers are still little sceptical about buying online. The customers are open for buying, but they still are not very enthusiastic about the way the ecommerce is taking off. In ecommerce, the cost of transportation is very high and customer actually wants to go to the showroom or visit an EBOs to have a feel of the product.
For small appliances like microwave, mobile, watch or clothes, consumers don’t mind buying online. But the consumer durables are large ticket items, so consumers want to see the colour, feel the product, the brand, the size and the design. And the same experience goes with the family. So, customers are still going to EBOs, MBOs and LFOs. Customer is looking for the better experience, big showrooms and wide ambience with multiple choices of products.
How do you see the competition in the market?
Home appliance is one of the most competitive industries in India with more than 40 competitors operating. Most of the international players have already entered Indian market and we want to tackle them by launching new products. We are planning to launch at least one new product in every quarter. These will be variants of refrigerator, washing machine and other products. We are also in discussion with lot of Indians and overseas companies for joint venture like we have partnered with Bosch. We make refrigerator with their technology.
What will be the future of consumer durables industry in times to come?
There will be IOT, products talking to each other and remote controlled appliances which will change the landscape of the industry and buying behaviour of the customer. As the economy is looking up, infrastructure in improving, disposable income is increasing and we see a great future for consumer durable industry in the country. And we want to grow at least two times more than the industry.
According to you what is the size of home appliances industry in India?
Every product has a different industry. The market size of the refrigerator is of $10mn per annum, of washing machine it is of $4 mn and of Air Conditions it is again $ 4mn. All these categories are growing by more than 10 percent per annum.
How do you forecast business in the upcoming festive season?
We already have good indicators from onum. We have grown by 25 percent in Kerala. So, we expect a good festive season business. Eastern and western part of the country contributes large demand for our products.