Essar Group-owned The Mobile Store opened doors in 2007 and took the mobile phone market by storm as sales of handsets zoomed in India.
Mobile Store had ambitious plans of expansion and being profitable in just a couple of years. However, in the last eight months, the company has been breaking even and the credit goes to its e-commerce venture and restructuring of its business model.
According to Himanshu Chakravarthi, CEO of Mobile Store, the change in strategy was due to stiff competition the company faced from the e-commerce firms such as Flipkart and Snapdeal and their predatory pricing strategy.
“It was almost impossible to compete with that kind of pricing and the discounts these portals offered. We then decided and launched our own site 13 months back. E-commerce is the way going forward and that cannot be stopped,” Chakravarthi said.
Herculean task
He further added that going online was not a Herculean task for Mobile Store as it had stores and warehouses even in smaller cities.
According to a study by deal discovery and coupon aggregation portal Zoutons.com, about 80 popular mobile handset models were being sold at top 10 online electronics stores — Flipkart, Snapdeal, eBay, Amazon, Tradus, Shopclues, Bagittoday, Naaptol, Homeshop18, Rediff Shopping. The cheapest price starts from Rs 1,000.
“We see it as a fantastic opportunity and a major chunk of our sales is coming through our online store. With a strong distribution network, we are looking at delivering handsets from our physical stores in smaller towns,” he said.
Even as the company is moving towards adopting e-commerce in a big way, it plans to scale down its physical presence. Of the 1,200 stores as of 2012, Mobile Store had shut about 300 stores. It further plans to shut many more in the coming months and simultaneously upgrade the existing ones as ‘experience’ lounges, where people will have access to free Wi-Fi to transfer data and contacts after a new purchase, have a look and feel of the products among several others.
The stores will also have a mini printer at these stores, where consumers can take printouts of pictures taken on a mobile camera, Chakravarthi said.
Easy Payment schemes
Besides, e-commerce, another strategy, which the company feels will propel its growth, is by catering to the class of consumers that doesn’t own either a credit or debit card.
According to Chakravarthi, 70 per cent of India’s population still uses cash for purchases. The company has tied up with Japan’s Aeon Financial Services to provide easy payment schemes for these consumers. The service has been launched in top 5 cities.