The challenges
There are certain factors that channel should take care of before announcing exchange schemes in their respective stores. The first and foremost is the valuation of the old phones. To make a good profit, one has to perfectly evaluate the price of an old handset, as the prices are volatile and change with every passing day. The channel have a technical team so they have an upper hand, as they can detect the flaws in a handset and evaluate the price well.
"The biggest and the only challenge we come across is deciding the cost. The prices should neither be less nor more than the market value of the handset. Otherwise, one will loose either the customer or profit margin, in case of an improper decision," said Vivek Palod, Director, Nagpur-based Mobile Magic. The company has a chain of mobile retail outlets running on the franchise model.
"A customer might sell defective/stolen handsets to dealers, which can get them caught in legal hassels"
But the evaluation of the right price is not the only issue. Kolkata-based Suresh Pandey of Calcutta Electric and Appliances Store warned that these schemes always involve certain risks. "In case a customer is unknown, he can sell a defective set to the dealer, if the latter fails to get it checked by proper technical people. Hence, technical know-how is a must. Also, many a times, customers try to sell stolen handsets. That might invite serious problems for a dealer. He might also get caught into legal hassles as well," he pointed out.
Manoj shared a way by which such threats can be dealt with. "One cannot and should not always trust a customer. It is important to maintain certain precautions while making these deals. In our shop, we have introduced a performa which has to be filled out by the customer. The statement includes the IMI number, billing or warranty details, ID and address proof of the customer, and other details of the handset and its accessories. This ensures the genuineness of the customers as well as the validity of the exchanged products," Manoj said.
Is it a game plan?
There is a feeling among the channel that such schemes, often run by LFRs and established players, are just to eliminate the small players from the market. Small players think that only big players in retailing can run such schemes, as they lack in resources and financial backing.
"LFRs do give such schemes and try to eliminate smaller players in the business. The only savior for us is that they do not give out such schemes on a regular basis, but on festivals or special occasions. For example, Big Bazaar gives such schemes on its anniversary or on festivals," said Santhosh KL, Proprietor, Channel 9, Bangalore. He also claimed that people were hesitant to buy from LFRs since their assessment methods are different.
But there are others who take this as healthy competition rather than a game plan. Bigger players like Rajiv of The Mobile Store think that there is space for every player and all can co-exist. "We intend to provide the same experience which can be maintained under the umbrella of a unique brand like The Mobile Store. This would organize the overall sales and ensure customer satisfaction, thereby encouraging footfalls. We have made our presence evident through over 600 functional stores across India. This will ensure the same unique experience and value for which we stand for," he added.
Mohamed expressed similar thoughts. "We are a small player. We offer customer a better price when he comes for exchange than the LFRs. I don’t see that it is a gimmick they are using to eliminate players like us. It is just a good business opportunity," he affirmed.