Surplus success seconds way
Indian consumers being value conscious are constantly on the lookout for stretching their hard-earned money without compromising on quality and service. Keeping this in mind the unique concept of GreenDust was launched by Reverse Logistics Company Pvt. Ltd. In an interview HitendraChaturvedi, Founder and MD, GreenDust shares about the brand and its future ambitions.
Abha Garyali (AG): Share with us the unique concept of GreenDust.
Hitendra Chaturvedi (HC): GreenDust is a brand by Reverse Logistics Company Private Limited (RLC) that is essentially a comprehensive reverse supply chain company. Indian consumers are very value conscious and are constantly on the lookout for stretching their hard-earned money without compromising on quality and service. GreenDust fills this need by providing branded quality factory seconds, surplus products, with damaged packaging, discontinued and overproduced items with warranty. To provide best of the quality products, RLC has a stringent quality control processes in place. After acquiring the product, the company puts the products through a rigorous 50-point quality inspection process to guarantee the quality. GreenDust not only gives its customers a unique shopping opportunity, but also provides the manufacturers, distributors and retailers an alternate organised sales channel where they can be rest assured that the returned/factory seconds products will not cannibalize their new product sales.
AG: What business model have you adopted for an electronic consumer durable brand like GreenDust? When and why did you adopt the franchise route for expansion of Green Dust?
HC: The challenge was to create a channel for the products that are returned annually, sell them for 25-30 per cent off the current market price, and still leave a decent earning margin. I kept my business model simple: Take the rejected/defective/unsold/returned products from the OEMs, refurbish them, provide a year's warranty from our side, and finally sell them as factory seconds through our brand, Greendust. Think of GreenDust similar to an ISI mark. The product will still be a factory seconds of LG, Samsung, Sony but when it goes through our strict inspection process we fix any small problem using genuine parts from the company and put a ‘certified GreenDust’ sticker on it. So the customer can be rest assured that they are getting a branded product that is certified by GreenDust.
We went both online and offline to sell. We went offline about one year ago primarily because we realised that a customer would like to touch and feel a factory seconds product before buying. Once the brand gets built and the trust gets established we will ramp online also.
AG: What can you say about the future success of GreenDust?
HC: I see a developing trend where more and more younger generation is buying GreenDust products not only to save money but also to make a bold statement that they are doing their bit to save our environment. This shows that the future is bright for our brand.
AG: Where would you like to see the brand in next five years?
HC: We have not made five year plans. However over the next three years we expect to scale up our business to the revenue of Rs 500 crore. Though RLC currently has a local deposition and localised acquisition drive, we want to create a global footprint starting with Europe and South Asian markets.
AG: What is the USP of GreenDust?
HC: Greendust gives the consumer an option to purchase unused, branded factory seconds, surplus, overstock, and refurbished products at the lowest prices – guaranteed. Our products are even cheaper than CSD canteen! Moreover by purchasing GreenDust products, consumers are also supporting the environment and a greener, healthier future for our kids as we strive to reduce waste that would have otherwise polluted the environment.
AG: What according to you is the scope for aspiring franchisees in this business? Is the future of this industry bright in the years to come?
HC: Aspiring franchisees have a gamut of opportunities to choose from. Indian market is still straddled with inefficient infrastructure, roads, etc which makes local level business person, running a franchise, an indispensible partner. Even with ecommerce, a franchisee can become a fulfillment centre for ecommerce orders. Franchisees will continue to play a very vital role in the growth of the Indian economy in years to come.
AG: How many franchisees do you presently have in India? What are your plans for the year 2012?
HC: We presently have 40 stores and plan to take our count to more than 100 in the next six months.
AG: What are the qualities and qualifications that you seek for in your franchisees? How much investment is required by aspiring franchisees?
HC: We are in search for franchisees that show similar passion and belief in GreenDust brand. They need to understand that a factory second with the backing of GreenDust service and quality is something that Indian customer can trust at par with large brands. Our potential franchisee also needs to understand the nature of factory seconds where product variety and brands change every week/month and they should be adept at selling what they have. They should also be good at building long term customer relationships as in our business we see over 60 per cent repeat business. A 1,000 sq. ft store may require about Rs Three lakh as initial set-up cost against Rs 20-25 lakh for an LFR.
AG: Share with us the challenges that can be faced by your franchisees? How can these be overcome?
HC: Most of the franchisees think that selling a factory second is similar to selling a new product. They will demand what they want and they will get it from the company. In case of factory second the product gets generated when a customer return happens, or there are some factory rejects, or transportation damage, or carton damage, etc. The biggest challenge and therefore the biggest opportunity are to educate our franchisees on the nature of selling factory seconds products that a customer can trust unlike products available in the grey market.
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