Online focussed smartphone maker Realme, which in October-December became the fourth largest smartphone brand in India, is facing challenges from several large retail chains who are refusing to stock the products due to low margin. However, Realme India CEO Madhav Sheth said in an interview the Chinese company works on low margin to offer best price to consumers and will collaborate with only those retailers who shares the same ideology.
What is your offline footprint right now? How do you plan to increase it this year?
We are currently present in 35 cities such as Mumbai, Hyderabad, Surat, Ludhiana and Chandigarh through more than 3000 stores. We are expanding our footprints to meet the rapidly growing customer demand. Starting with ten cities in January, we will be eventually adding 50 cities every quarter. We will establish 20,000 outlets throughout the country covering 150 cities by 2019.
What strategy you would adopt for offline expansion considering all leading chains in South and now Reliance Retail have decided not to sell the brand?
Being a customer-centric brand, we always focus on giving the best price for our customers hence we work on low margin. To follow this ideology, we look forward to partner with only those retailers who share the same ideology and approach. Within a month of starting our offline sales in the Southern region, we have been getting good response from general trade in Bangalore and Hyderabad. Despite operating on restricted margins we are working with chains like Global Access, TecQ and Cellbay. We are on the verge of collaborating with one of the biggest retail chain in South India soon.
What about the partnership with Reliance Retail getting over?
To offer real price of the product for our customers, we work on low margins and look forward to collaborating with such partners. We were in an exclusive partnership with Reliance Digital and Jio stores for offline sales last year. As we have expanded our footprints across the country, our collaboration with the Reliance group has been called off.
How critical is offline presence for success in India?
We are expanding to offline markets as we have seen huge customer demand from the offline space. To reach out to our customers in the offline space and accomplish our sales strategy which is ‘Realme for every Indian’, we have chosen to expand right from tier 1 to 3 markets.
Offline market is the core of India and hence our presence in offline is very important. As a brand we have always taken utmost care in maintaining parity in all formats of trade to have equal platform. To achieve our target, offline presence is a must as there are more consumers who would want to touch and feel the product before making their purchase decision.
Any plan to change the margin structure for higher offline presence? Retailers say the margin offered is the lowest. Realme as a young brand is committed to deliver the best consumer experience and provide maximum benefit to our customers on low margins while working with distributors and retailers. As a policy we do not believe in making profit at the cost of the customer. Working on restricted margin, Realme tries to give maximum benefit to its customers as well as partners by planning innovative and impactful marketing campaigns which in return drive additional footfall at stores.
Since you are predominantly online sales dependent, what is the impact of the new FDI policy in e-commerce on your performance?
Realme has been witnessing an overwhelming response towards all the smartphones we have launched so far. Due to high consumer demand, our stock sell out very fast hence we will not be impacted due to the change in policy. Being the market disruptor, the brand has created a huge fan following for itself having more than four million fans.
Flipkart and Amazon are two platforms. According to the FDI rules, the platform cannot have any stakeholding in the seller company. One seller can only sell 25% of its stocks on an e-commerce platform. But this government rule is actually not a limitation for any seller; a seller can choose more platforms to sell its products to achieve 100% sales. The FDI rules was on interest of all the sellers — it gives huge opportunity for the sellers to directly deal with the brands.
What is the contribution of online to total sales and how do you see that changing with the entry into offline?
Before launching in offline, 100% of our revenue used to come from online sales. Now as we have launched offline, Realme India is expecting to get 30% of its revenue from offline and balance 70 % from online market. We will balance our investment on both online and offline platforms.―Newsfeed