Starting a mobile and accessories business can be highly profitable and competitive. In addition to mobile franchises, selling accessories through independent stores and kiosks is turning out to be a profitable business model.
With offline sales of mobile phones and accessories continuing to be high despite online sales, various mobile and accessories players are strengthening their offline presence throughout India. For instance, Xiaomi is on an expansion spree with its MI Homes, MI Stores and Preferred Partners’ footprint. Mobile and accessories store chains like WK Lifestyle and Celekt have aggressive plans for store expansion. Simultaneously, brands like Samsung and Vivo are leaving no stone unturned to fortify their offline presence with exclusive stores and among multi-brand outlets. “Given the market dynamics in India, it is equally essential to have a physical presence in addition to online presence as majority of Indian consumers prefer to experience the product before purchase.
ACCESSORIES AND GADGETS
Mobile accessories and gadgets is a lucrative segment offering high RoI and quick break- even, subject to a strategically placed outlet. Moreover, with only a handful of organized players, the competition is less compared to the mobile handset category. “A typical 300-400 sq. feet franchise outlet may cost around Rs 30-35 lakhs and 700-800 sq. feet at Rs 70-80 lakhs, which includes one time franchise fee of Rs 4.5 lakhs. This covers the cost of initial stocks, interiors and IT systems,” shares Gaurav Dabas, the founder of WK Lifestyle.
“As a brand, we take care of staff recruitment, trainings, marketing as well as consumer schemes,” he adds. According to Dabas, a franchise owner can easily expect Rs 15-20 lakhs of business per month coupled with high 32% margins. “In fact, our Mall of India (Noida) outlet has been making Rs 30- 35 lakhs per month. We ensure that a franchise gets RoI of over 65% and is able to break-even in 1.5 to 1.8 years,” he reveals.
MOBILE MODEL
A mobile hand-set store offers flexibility to include accessories’ retail as well. As per a Samsung franchise lead, the initial cost of an exclusive outlet comes at Rs 25-35 lakhs for 250-400 sq. feet, which includes interiors, initial inventory and IT systems’ expenses. Xiaomi, on the other hand, offers MI Stores franchise with investment of Rs 12-15 lakhs, which includes initial stock, interiors, IT systems as well as security deposit that is refundable after two years. It supports franchisees with branding, trainings, book-keeping and back-office support, inventory audits and merchandising assistance. The space requirement is 200-300 sq. feet.
The Mi Store project is expected to boost entrepreneurship and generate massive employment opportunities with over 15,000 jobs in small towns and rural locations, shares the Xiaomi spokesperson.
Xiaomi also offers a ‘Preferred Partnership’ model for multibrand outlets. “With an investment of Rs 5-6 lakhs, which may go up to Rs 15 lakhs for initial stocks, multi-brand outlets can become MI Preferred Partners. They can make Rs 25- 30 lakhs in monthly revenues. This is a high run-rate business with margins of 5-7% which goes higher with target-based schemes,” details Ajaya Kumar, Director, Park Networks, a regional distributor for Xiaomi.
AGGRESSIVE EXPANSION
A majority of the mobile and accessories’ brands have intense focus on expanding their franchise footprint. Vivo plans to add over 100 exclusive stores to increase the footprint to more than 350 by 2019-end, shares Marya. Xiaomi, which has over 50 Mi Homes, 500+ MI Stores and over 5,000 MI Preferred Partner stores, aims to add 100 Mi Homes. “In addition, we plan to open 5,000 Mi Stores in Tier III and IV towns by the end of 2019. We expect contribution from offline sales to grow to 50% by end of 2019 from 30% currently,” confirms the Xiaomi spokesperson.
In addition, Hong-Kong based electronic gadgets and accessories’ store chain WK Lifestyle is opening 200 stores in India over two years. The company has three outlets in Noida, Delhi and Jaipur and is opening six more in cities like Delhi, Gurugram, Lucknow and Chandigarh in April. Further, mobile retail firm Celekt is planning pan-India expansion with 200 stores in 2019. In the next two years, it will set up 300 more, covering the southern, western and northern markets.
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