How to earn high ROI and quick break-even with minimum investment?
Mobile accessories could be lucrative segment for those who have started early as as the market can be vouched for high ROI and quick break-even, if invested wisely.BY Shipra Srivastava | Nov 02, 2017 | comments ( 0 ) |
With the growing number of mobile phone users, India continues to have largest consumer base for mobile phones and accessories. As per the latest findings of Telecom Regulatory Authority of India (TRAI), the number of mobile users in India is surpassing more than a billion which in-turn generates immense business opportunity for mobile accessories retailer. According to Future Market Insights, more than US$ 32 billion revenues have been amassed from sales of mobile phone accessories across the APAC region in 2016, Report also indicated that By the end of 2026, the mobile phone accessories market in India is anticipated to reach a value of US$ 3,545.0 million, registering expansion at a stellar CAGR of 10.4%. Products such as protective cases for mobile phones & smart phones, and audio gear such as headphones and earphones will continue to be top-selling mobile phone accessories in India.
No doubt, mobile accessory is a very exciting segment for anybody who is looking to start a business with minimum capital. This business can be started with mere Rs.50, 000 and vouches high ROI and quick break-even. Moreover, with handful of organized players in the market, the competition is less compared to core mobile hand-set category. However, alike to every business, this business also has few challenges. Let’s shed light on few..
Market and Challenges
Phonokart is one emerging player in this segment. The company started hardly four years back and presently operates via its exclusive e-commerce portal and eight distributors. Highlighting the market scenario, Mahesh Jain, Owner, Phonokart.com said,” The market is quite big where India has about 6000 cr mobile accessory market. However, the share of organized market share would hardly be around Rs500cr to Rs600 cr. Rest of the market is handled by unorganized markets such as Gaffar market and Nehru Place in Delhi which they have good ‘hold’ in this unorganized business.”
Going further Jain asserts maximum consumers in India prefer cheaper products because in case of quality products they have to pay more. Consumers want quality products in cheaper rates which is not possible. Many players which are into offline space cannot give good price and good quality because they have comply with custom duty, GST, etc. The same thing does not happen with unorganized sector. That is the reason unorganized segment is booming in mobile accessories segment.
Pebblecart.com is yet another player in this segment which has more than 40 distributors who work across 24 states. These distributors reach out to more than 5000 retail outlets. The company also has a national distributor called Ingram Micro which one of the biggest technology distributor in the world. Apart from its exclusive e-commerce, the company is also retailing via in-flight channel. Speaking on current market, Komal Agarwal, Director- Marketing, Pebble Mobile Accessories asserts, “Right now, the market is so unorganized that there is no brand equity at all. There is no clear brand comes to mind when it comes to mobile accessories. Our mission is to become ‘go-to’ brand. So if the customer wishes to buy a simple thing, they should come to us.”
Most of the players operating in this segment are retailing either by online, mobile shops, electronic consumer durable shops, music shops, computer peripheral selling shops. There is hardly any player who operates via exclusive offline retail. By and large this segment is operating on local distributorship model. Highlighting the distribution, Navin Sharma, Head Sales & Marketing Portronics said, “We have a well-defined channel sales distribution setup across India, having more than 100 distributors and over 5000 satisfied retail partners. These business associates of our company are well versed and experienced and extending distribution far & wide in their assigned sales territories.” The company continuously conducts market research through its vast network of dealers & varied customer profile to understand the need & requirements so that new Innovative products may be introduced,” informed Navin.
With over eight years of solid growth at over 50% year on year Portronics is among the leading market players in this segment. However, with changing market scenario people are opening up for exclusive distribution as well. Speaking on same, Jain said, “We are planning to have our retail store by next year. Basically, we are planning to open in malls in Chennai and Bangaluru, Hyberabd. We think ROI will be much faster with mall locations.”
Though exclusive channel comes with its own set of challenges and may not be a feasible option for start-ups. “That is like having retail of our own at the moment we wish to focus on brand building and extending the reach, and if we get into retail at this moment, it will be very difficult to handle both. First, we want to capture the existing players well, once we feel we have sort of saturated them then we would like to go into our own retail also,” informed Komal.
ROI and Break-even
Return on investment is really descent in accessory segment; however, the only concern is constant investment as it is fast moving market where almost every day a new launch is taking place. Whenever a new mobile launches take place you have to get its accessory in well in advance. And, you have go by your own judgments/ predictions about the performance of that brand, and it is not easy to achieve the break even in three-four years. It will take at least five years in achieving the break even and earn some good profit.
“This market is totally dependent on launches that mobile industry is making. If newly launch hand-set is not selling as expected then you stuck up with a lot of stock which is unmovable. You have to take a calculated risk to earn a profit from it,” informed Jain.
Speaking on same, Agarwal said, “Because product range is so wide different categories within the mobile accessory segment so the ROI varies from category to category. But, on an average, a distributor might get around 10%-15% ROI. Since, this market is very fast moving and lead time is very small, I mean the orders come back to back so the break-even can be achieved quickly. I would say less than a three months time. However, it takes time to earn descent amount of revenue out of it.”
The market is so niche so the players who have started early literally have no competition at all. There are small-small players scattered across the country with different distribution channels. As of now, there is no major player who is present is present across all channel. “There is no major competition for us across the channels. However, the online space has started becoming competitive. However, MI offcourse has captured the online market reasonably. But, they are not direct competition to us because they work in selective categories..Yet another player called Bot is doing pretty well but they do not do power bank which is our forte. We have the advantage of starting early.”
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