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Mar, 01 2008

Mobile goes franchising

Mobile phones today have moved beyond their fundamental role of communication and graduated to becoming an extension of the persona of the user. It has grown as a status symbol among the users now. India today is witnessing an era when people buy mobile p

According to a recent study done jointly done by IAMAI (Internet & Mobile Association of India) and IMRB International (Indian Market Research Bureau), the mobile industry in India was estimated to cross China in terms of mobile subscribers and handset users. The study reveals that boom in the telecom industry has given rise to new business opportunities for retailing and franchising in mobile phones which includes handsets, airtime and accessories. The business was worth more than Rs 30,000 crore in 2006 and is growing over 30 per cent per year. It has been estimated that by the end of 2010 this industry will cross Rs one billion mark. It reveals that 58 per cent of the rural population and 95 per cent of the urban population will be covered by mobile networks by 2011. The total number of mobile connections in India will have increased to more than 462 million
Rajiv Agarwal, CEO and Director, The Mobile Store Ltd says, “Statistics have shown that the mobile phone market today stands at Rs 30,000 crore, growing at 60 per cent every year. India has about 220 million mobile subscribers` base which is growing at a rapid pace; the scope for growth is tremendous.”
Vivek Palod, Director, Mobile Magic says, “In China mobile penetration is almost 50 per cent. Though we have huge gap, but this gap is reducing rapidly. We would add equal number of subscribers in next three to four years. But the mobile retailing business is unorganised. Hence, there is massive scope for organised mobile retailing, backed by repair services & technology cellular service revenue in India.”

Huge market
India`s mobile sector is witnessing an enormous growth, as falling tariffs and rising incomes are bringing mobile phones within reach of millions of new customers. Mobile industry players are eyeing this as their new area of opportunity. The fact that the mobile users are expected to cross 500 million by 2010, with an addition of about five to six million subscribers every month is a big moral booster for the industry.
Sudhir Mathur, General Manager, Sony Ericsson, India, says, "With the enhanced portfolio of products across segments, now is the right time to consolidate and take the share of the pie in this booming market.”
According to a comparative study by Telecom Regulatory Authority of India (TRAI) of the telecom market in China and India, Indians use their GSM mobile for 330 minutes as against 297 minutes in China. The usage of mobile phones is higher in India because of much lower tariffs and due to fierce competition among different service providers.
Commenting on the statement Rajiv Agarwal says, “Mobile retail sector is emerging with this burgeoning retail industry growth. The whole concept of mobile shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storied malls and huge complexes offering shopping, entertainment and food all under one roof.
Romy Juneja, COO Mobilenxt opines “Organised mobile retail sector will find its consumer. A large young working population, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organised mobile retail sector in India.

Value-added services
An important component of the mobile industry in India is the value added services (VAS) provided by mobile companies in terms of mobile ringtones, mobile games, SMS, mobile games, mobile accessories, and gift coupons etc.
Commenting on that Palod says, “We have a huge commitment towards VAS. I believe the next big business is going to be in this space. We are pioneering the VAS business by leveraging our first mover advantage. The mobile handsets will now entertain, assist, guide, navigate, and teach where VAS will play a major role. Looking at the trend and the buzzing activity in this sector we have tied up with Hungama Mobile, Soundbuzz, Indiagames and Killer Mobile which will give us an edge over the others in providing the latest Indian & western content.
Rajiv Agarwal adds that “GPS integration on the mobile phones, video streaming and Mobile TV are the latest technologies in the mobile phone industry. With 3 G coming up as a technology, mobile entertainment is gaining importance. Business phones now have a lot of multimedia features making it more of a lifestyle mobile. With voice revenues per user plummeting and with call rates in India being the lowest in the world, operators are betting on VAS to increase their overall revenues. VAS in its current avataar is acting the role of differentiating an operator from the other.”
Researchers reveal that the current VAS market in India is about Rs.2,850 crore, and is expected to grow at 60 per cent per annum and will cross Rs.4,650 crore by the first half of 2008. VAS industry in India is generating huge business opportunity for individuals as well as creating lots of job opportunity.

As more and more people become tech savvy, the idea of selling mobile phones and its products online is not a bad one. Though portals like Indiatimes, Rediff, Bazzi or NDTV and eBay sell mobile phones along with other items online, Chennai-based UniverCell has gone one step ahead by focusing on selling only mobile phones and all other accessories online. All you need is a credit card to buy your favourite phone next time. The cool feature about these websites is that it lets you compare phones side-by-side just like in a showroom, and helps you to arrive at a decision. These websites stock almost all the models introduced in India by Nokia, Sony-Ericsson, Motorola, LG, Samsung etc. at both higher and lower end of the price band.
When we talk about the opportunity, we can say that these mobile selling websites will create lots of opportunity in terms of employment and also help in starting up own business, with very less capital.

Why franchising
The retail market for mobile phone handsets, airtime and accessories is already Rs 75,000 crore, growing at over 20 per cent per year. However, mobile industry in India is highly unorganised. There are more than 90,000 retail outlets in the country out of which only one per cent are organised. But the scenario is changing very fast as mobile market has seen a major domestic and international expansion through franchising.
As the government is encouraging foreign investors to set up their base in India, many foreign mobile retailers like Cellcom have entered Indian market through master franchising.
The market is expanding so fast that many mobile handset manufacturers like Motorola and Sony Erricson have also decided to open exclusive stores. These manufacturers have now understood that with the help of franchising they can establish and deepen their presence.
Commenting on the issue Lloyd Mathias, Director Marketing, Motorola says, “Franchise helps in expanding business, because franchisees do have local market knowledge, which helps us in penetrating deep into smaller towns and cities.”
Industry experts believe that mobile phones are like perishable products. Franchise ensures that there is no dead stock; also the stock is secured properly. Looking at the current trend, local companies like Mobile magic and Mobilenxt have joined the race to reap the benefits by opting for franchise route. Palod says, “Mobile buying is a referral purchase. We think that franchise helped in strengthening the name of the company on local level`.
Franchising helps in keeping companies goodwill intact, feels Mr. Palod. “With the help of franchise, mobile industry in India has very bright future both on the domestic front as well as from export point of view.”

Potential franchisees
Mobile franchising is a service that is delivered over and over again, and it is not one time buy e.g. the relationship between the customer and the mobile shop franchisee does not end just after the sale of one mobile hand set. After- sale support is equally important to strengthen the customer and franchisee relationship.
In case of mobile franchisees, it is important that the franchisee is able to find the right kind of customers locally. Mathias says that it is very important that the franchisee understand well that it is not just the name, but the entire system that is associated with his functioning.
Although all franchisors do have their own sets of guidelines, franchisees play an important role in the expansion of any business. A person opting for mobile franchise should be familiar with the mobile market scenario. The investment required is Rs. 9 lakh and above, with a showroom area of 300 to 500 sq.ft.
Commenting on the issue Palod says that location is very critical while giving franchise to an individual. We also give importance to a person who is financially sound and who is looking forward to making a career out of it, an individual who is young, tech savvy and with good social contacts and good will.

Main players in India
Mobile Magic:
When the world was beginning to enjoy the benefits of mobile revolution, a revolution was taking place in the minds of three young men in the city of Nagpur-- the revolution of setting up a large retail chain of stores for mobile phones & accessories. However, the concept was new and people were hesitant to accept and support the idea. But the trio went ahead and started Mobile Magic, the biggest and the fastest growing chain of retail stores for mobile phones & accessories. It is a one -stop shop where everything about mobile world is available under one roof. The first store was started on July 2004 in Nagpur and since then it has been a story of growth & success. After successfully running the first store, the company has decided to scale up the business across the country. Today they are India`s largest chain of franchised mobile retail stores with 90 outlets in nine states in just two years.
Mobile Nxt:
MobileNxt is one of the first and the widest chain of retail stores, offering mobile phones, connections, operator services, value added services, accessories, exchange and after sales services. MobileNXT is headquartered at Bangalore and currently runs stores spread over Ahmedabad, Bangalore, Chennai, Delhi, Gurgaon, Ghaziabad, Hubli, Hyderabad, Kolkatta, Lucknow, Mangalore, Manipal, Mysore and Salem, covering all regions of India. In the first year of operation, MobileNXT shall have a turnover of 25 crores.
Mobile Store:
As a part of Essar and Virgin Mobile Group The MobileStore format is of a `one stop mobile solution shop` that provides multi brand mobiles, accessories, connections, repairs, VAS etc all under one roof. MobileStore is India`s first national chain of multi-brand and multi-service telecom outlet.
The store has so far crossed 360 mark and geared up to set up over 2,500 stores in the next three years across 600 cities, thus covering virtually every major town in every state across India. The MobileStore caters to the Indian consumer, offering the widest and most comprehensive range of mobile phones with special offers from all the key brands available across the globe.
Consumers across India will now be able to enjoy a world class standard of mobile retail service to help them get the maximum from their phones. The MotoStore will offer access to interactive experiences and exclusive content, as well as personalised services such as mobile phone tattoos, Bluetooth photo-imaging and ring tone downloads. MotoStore is an exclusive retail store of Motorola. It started its operation in India from April 2007. The company has already opened its stores in six cities across India and planning to double that by the mid of 2008.
Sony Ericsson:
The company`s retail presence is noticeable through 375 plus shop-in-shops, which have dedicated corners for Sony Ericsson`s products. The company also has nine Advantage Stores-the Sony Ericsson exclusive stores-in all the metros to give consumers a complete feel of the Sony Ericsson products. The mobile handset maker has also gone one step ahead in making the customers know what they are buying and what the handset features mean to them by taking the customers to their Experience Stores. There are currently 20 such stores in metros and some `A` category cities, and the company plans to expand the number to 100 by the mid of next year.

Bright future
Indian mobile market offers an unprecedented opportunity for telecom service operators, infrastructure vendors, manufacturers, retailers, franchisors and associated services companies, feel experts. The huge market is reflective of immense potential in the area of mobile retailing and franchising. Today Indians are keener to follow their foreign counterparts, in terms of mobile market share.
Rajiv Agarwal says, “Mobile retailing in India is gradually inching its way towards becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in mobile shopping in India.”
Agarwal further adds, “In today`s consolidating organised retail market place, offering consumers a unique, attractive shopping experience is getting tougher all the time. Indian mobile Industry is playing in safer way, thus making itself to grow big in coming months. However, the challenge is to grab mindshare and create top of the mind recall by connecting to the consumer across various levels, thus creating brand loyalty. A brand will stand out only if it is successful in creating an aspirational experience to the customer.”
A recent research has confirmed that India`s mobile phone market is set for a period of fast growth, with revenue from cellular retail services expected to jump by more than 18 per cent each year for the next five years. Looking at the current rate of development, Indian market will witness a major boom in the industry.

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