LG to focus on regional distributors

LG Electronics India has surprised the channel community with its decision to

have a strong force of regional distributors together with its existing national

distributors. The decision does not go in favor of the existing national

distributors - Compuage, Priya and Wellwin.

These will now be forced to compete with a large number of regional

distributors. As a result, the current national distributors may either have to

become city distributors or opt out of LG.

However, Ganesh Maha-lingam, GM, Marketing, LG, says, "We are looking at

a co-existence of national distributors and regional distributors as both of

them have their roles to play."

The process of appointing regional distributors has already begun and the

company is initially targeting 120 regional distributors for covering the entire

country. "This number will continue to grow," says Ganesh.

LG has got a strong presence in the consumer durables division with its

warehouses in many cities. According to Ganesh, LG has the advantage of using

its existing infrastructure which is being used for its consumer durables.

Reacting to LG’s decision, TAIT president, Umang Mehta says, "This is

a bold step and they seem determined to succeed. This is probably for the first

time any IT company has done this on such a large scale. Philips too is doing

it, but on a smaller scale."

Resellers have given mixed reactions to LG’s decision. While some resellers

feel LG’s volumes will come down in this model, there are many who feel it is

a positive move as they can leverage on the strength they have in consumer

durable distribution and its infrastructure.

According to Umang, credibility of the regional distributors could be a

stumbling block in this model. "You can never ascertain the credibility of

any reseller looking at their balance sheet," he adds.

"Each principal has his own strategy and this is a bold step which LG

has taken. I feel its competitors will soon follow," says a reseller.