Here Today, Gone Tomorrow

Every year, several brands of peripherals enter the Indian market and take
the channel route in their bid to make money. While some stay, most of them
disappear, leaving channel partners in the lurch, especially with the post-sales
support issues

Given the rising IT business opportunity in India, several brands of
keyboard, mouse and UPS entered the market with enthusiasm, but slowly retreated
after the initial euphoria wore out. Often, they vanish as if they had never
existed.

These brands foray into the market without any proper planning and in some
cases they are in search of immediate profits. The motive is to make the most
out of the slightest opportunity, which is why they try to ape the known brands
in this space. The moment they start losing money they run away from the scene
leaving behind several unheard claims, unattended and dissatisfied customers not
to mention furious dealers and distributors

Ever wondered why these fly by night brands fail to make a mark? An obvious
answer would be because of steep competition and inferior quality of products.
But there is more than just competition and quality that forces them to withdraw
from the market.

According to Amit Kumar Kedia of Delhi-based Tech-Com brand of products,
almost every one now dabbles into import and due to lack of good planning, they
flop. “Companies don't do any proper planning, and enter into the market in a
disorganized way,” he noted. He further added that these companies fail to
understand that there are several legal implications that have to be adhered to
and a strong framework has to be drawn in order to sustain and flourish at a
later stage.

Peripherals rule

Apparently this practice of getting into business one day and getting out
the other is rampant in peripheral markets, including keyboards, mice, speakers
and UPS. It is easier to get into this space as a high technical expertise or
market research is not required to design these products. But this business is
not easy to sustain either.

Brands like F-Line, Annie, Advik were such brands, which were in the market
and catered to a large chunk of SOHO customers. Today only a few of the dealers
are aware of them.

“Such brands are nothing but imported material from countries like China and
Taiwan and all they needed to do is coin a fancy name to sell the product and
further it in the market. They calculate rough margins and almost overlook the
warehousing cost,” said a dealer who was earlier selling one of these brands.

The idea basically is to sell a variety of goods to get maximum revenues.
They essentially sell in volumes and the entire business model is designed to
boost sales. In a nutshell these brands don't want to struggle and adopt the
'wait and watch mode' in their bid to survive in the market.

Aditya Vikram, owners of Delhi-based Compware and Advik brand of peripherals,
however denied that Advik has been withdrawn from the market. “Advik is in the
market and we are looking to add networking products under the same brand name.”
But he did agree that there has been a change in the strategy when it came to
selling Advik products. “The company was trying to revamp the way it has been
functioning and hence the rumours may have been very well the result of the
same,” Vikram mentioned.

In Panipat region, companies like Adcom, Ankit (peri­pheral brands) were till
sometime back actively present in the market. But all of a sudden these brands
have ceased to exist.

Ajay Singla, President, Panipat Computer Dealer's Association clarified,
“There have been many such brands and companies that approach dealers in the
upcountry location thinking that we are easily approachable and leave behind
stocks that later becomes difficult to liquidate.”

Prime products

The UPS industry is another such segment that has a huge scope for the
lesser renowned companies to try their hands at. It is the SOHO market where
these not so popular brands try to make money. They offer lucrative prices to
the dealers who are not making any margins in the entry-level UPS category.
Under such circumstances, a dealer is bound to fall into the trap of a company.

Alok Jain, CEO, Arihant Powertronics stated, “It is only in online UPS and
offline UPS for the enterprise category that dealers like us earn handsome
margins. In the entry-level UPS that is meant for the SOHO segment, the margin
is almost negligible unless we sell in volumes.”

Brands like Pioneer, Intelligent or Power Link among others which had been
operating in the market some years back are nowhere to be found. Solus was yet
another brand that disappeared from the Panipat region.

Motherboards are yet another category where many companies offer cheaper
options to a market that is not looking to shell out a huge sums for a defunct
motherboard.

Brands like Omaxe, Mora had motherboards to cater to the replacement market
and assembled PC sellers. These brands at one point in time were present at most
IT hubs but have now faded, leaving behind clueless customers and system
integrators.

How the channel suffers

“It is not only the leftover stock that has to be taken care of, but our
relation with customers too get affected. If it is a big company then we can
forward our plea but with small ones the scenario changes as there is no
official person to approach,” opined Singla.

However, Dhiraj Tody, CEO of Gazhiabaad-based Parity Computers and
sub-distributor of Solus brand of UPS in Uttar Pradesh and parts of the northern
region clarified, “In Panipat, Solus did have a presence and the company was
present through us for atleast one and a half years. However, since the demand
was not as high as in the other regions, they resolved to discontinue selling
the brand in the region.”

A dealer from the north pointed out that many times he has bought stocks from
a particular company only to have it lying with him for months, because the
brand is not known. Under such circumstances if a company ceases to exist, then
handling the stock and warranty becomes a tough task.

Chennai-based Navin Sethia, CEO, Delta Peripherals who deals in peripherals
such as motherboard, speakers, cabinets and accessories among others stated that
even the southern India market is not untouched by such unpopular brands. “Every
year about 14-15 such brands enter the market. Out of these only five to six are
able to sustain in the market, the rest vanish from the market or wind up
operations, and it is the dealer who ends up incurring losses,” he said.

He further indicated that the way these brands make their way into the market
is by offering lucrative schemes and low price points to the dealers. Traders,
who want to make fast money and do not have the financial muscle to keep larger
stocks of branded items, fall prey to such companies.

Another problem arises when these companies change their distribution chain.
“They change their distribution chain and the person who had purchased stock
from him is left in the lurch. In such cases even if they provide warranties to
them it becomes difficult to trace the source from which the product was
originally bought,”Sethia added.

He also indicated that it is not only in peripherals that one can come across
such brands. Even in the PCs (desktop), southern region has seen brands that at
one point in time entered the market and are now nowhere to be found.

Singla suggested, “The only solution to get rid of this problem is to get the
companies enlisted with the associations so that in case the company disappears,
the association can intervene in the situation and take stern action against
them.”

Ashish Jain, President, Bhopal IT Association men­tioned, “Since these brands
vanish from the market, warranties become the headache of the resellers and the
dealers who end up either landing in financial trouble or hampering relations
with their customers. Again, since the members of the association and other
dealers do not take interest in this actively eventually they face problems.”

These measures might not prevent unknown companies from entering India and
promising partners a lot of goodies for sales. Ultimately, partners have to use
their prudence to decide if they want to stick to the volumes and low margin
game or focus on offering good solutions and building a strong clientele
instead.

POOJA SHARMA

poojas@cybermedia.co.in