MUMBAI: The boom in the telecom industry has given a boost to entrepreneurship in smaller cities. It is not only the rising communication but the size and penetration of the industry is throwing up new business models for retail. A trio has come together to set up a retail chain with franchisees in Tier II and Tier III cities.
Vijay Singh, Vivek Palod and Ravi Kedia all our from business families, which were into trading and small retail outlets. Vijay Singh was Nokia’s dealer for Maharashtra and realised that there was enormous potential in creating a presence in smaller towns.
Vijay Singh, founder & CEO, Mobile Magic, “I had two options: Expand the Nokia franchisee and distribution across the state or venture out on my own. I wanted to start something of my own, but was looking for a partner with similar ideas. That’s when I met Vivek.” Vivek Palod, director, Mobile Magic also had experience of distributing mobile phones.
Initially, Mr Singh and Mr Palod started the venture with their own money, but then they were joined by Jalgaon-based businessman Ravi Kedia. Thus, was born Mobile Magic on July 14, ’04 in Nagpur. The business strategy is simple. “We target Tier II & III cities because metros are already saturated with outlets.
Moreover, there is a big scope to sell other brands than the dominant ones in smaller towns,” says Mr Singh. “The smaller towns are price sensitive and are not loyal to brands. Which is why we sometimes import cheaper handsets from Korean and Chinese makers directly for this market,” he adds The company operates on both self-owned and franchise model and has 34 retail outlets in small towns of Maharashtra, MP, Chattisgarh and South Gujarat.
The margins on pure handset sales are not high, but demand for ringtones, games, accessories in smaller towns is on a rise. Mobile Magic has five product lines — mobile products, applications, accessories, add-ons, software services.
“There is a large segment of consumers who do not own credit cards, and don’t want to buy from the internet, we help them download and pay cash at our centre for games and other services,” Mr Singh says. “Mobile Magic has tied up with gaming companies in the US and Europe, which can give them access to cheaper and better games.
Some of the Indian games are not really up to the mark and are not so popular as paid games,” Mr Singh says. Mr Palod says, “We have regional tie ups with operators to sell cross bundle services. This works on a revenue sharing model.” As a start up, the three promoters of the company are trying to gain ground both in the GSM and CDMA segment.”
Currently, the company operates through 34 retail outlets, it has plans to open 16 more in the next two months. It will set up franchisees in cities like Dhule, Malegaon and Raipur, as per the business strategy, which is to tap the small towns potential. By March ’07, Mobile Magic plans to open at least 200 franchise stores across Western India.
Last fiscal, the company’s turnover was Rs 3 crore, but this year they have already done business worth Rs 15 crore, claims Mr Kedia. “We plan to close ’06-07 at Rs 70 crore,” he adds. This doesn’t look difficult to these starry eyed small town men because “everything is going as per plans,” they say.
The company was looking for funding, but has since decided that it will open at least 100 stores across the country before seeking one. Initially it was difficult for the trio to convince the manufacturers about supporting them. “Like any new comers we had certain hiccups when we went to meet some prospective business associates,” remembers Mr Singh.
There was difficulty in convincing mobile manufacturers as it was a new concept to sell mobile phones with bundled services. Also, Nokia which has a dominant market share in the industry was not very keen on giving the same terms and margins as it gave to their priority dealers. But other manufacturers like Motorola were keen to support the chain.
Operators were more supportive though in a small way. They allowed Mobile Magic to sell branded phones with some freebies like caps and T-shirts. Some players like LG supported the company’s print advertisements by reimbursing half the amount. Things started changing after Mobile Magic crossed the 10-store mark.
“The mobile manufacturer realised that we were not talking in the air. They started dealing with us directly and our revenue share ratio improved,” says Mr Singh. “Now we don’t have to approach the players through middlemen,” he adds.
Recently, the company has tied up with Motorola to set up an authorised service centre for providing GSM and CDMA services to the users. “Things are beginning to look better though there is still a lot of ground to cover,” says Mr Palod.
Source : ET
Vijay Singh, Vivek Palod and Ravi Kedia all our from business families, which were into trading and small retail outlets. Vijay Singh was Nokia’s dealer for Maharashtra and realised that there was enormous potential in creating a presence in smaller towns.
Vijay Singh, founder & CEO, Mobile Magic, “I had two options: Expand the Nokia franchisee and distribution across the state or venture out on my own. I wanted to start something of my own, but was looking for a partner with similar ideas. That’s when I met Vivek.” Vivek Palod, director, Mobile Magic also had experience of distributing mobile phones.
Initially, Mr Singh and Mr Palod started the venture with their own money, but then they were joined by Jalgaon-based businessman Ravi Kedia. Thus, was born Mobile Magic on July 14, ’04 in Nagpur. The business strategy is simple. “We target Tier II & III cities because metros are already saturated with outlets.
Moreover, there is a big scope to sell other brands than the dominant ones in smaller towns,” says Mr Singh. “The smaller towns are price sensitive and are not loyal to brands. Which is why we sometimes import cheaper handsets from Korean and Chinese makers directly for this market,” he adds The company operates on both self-owned and franchise model and has 34 retail outlets in small towns of Maharashtra, MP, Chattisgarh and South Gujarat.
The margins on pure handset sales are not high, but demand for ringtones, games, accessories in smaller towns is on a rise. Mobile Magic has five product lines — mobile products, applications, accessories, add-ons, software services.
“There is a large segment of consumers who do not own credit cards, and don’t want to buy from the internet, we help them download and pay cash at our centre for games and other services,” Mr Singh says. “Mobile Magic has tied up with gaming companies in the US and Europe, which can give them access to cheaper and better games.
Some of the Indian games are not really up to the mark and are not so popular as paid games,” Mr Singh says. Mr Palod says, “We have regional tie ups with operators to sell cross bundle services. This works on a revenue sharing model.” As a start up, the three promoters of the company are trying to gain ground both in the GSM and CDMA segment.”
Currently, the company operates through 34 retail outlets, it has plans to open 16 more in the next two months. It will set up franchisees in cities like Dhule, Malegaon and Raipur, as per the business strategy, which is to tap the small towns potential. By March ’07, Mobile Magic plans to open at least 200 franchise stores across Western India.
Last fiscal, the company’s turnover was Rs 3 crore, but this year they have already done business worth Rs 15 crore, claims Mr Kedia. “We plan to close ’06-07 at Rs 70 crore,” he adds. This doesn’t look difficult to these starry eyed small town men because “everything is going as per plans,” they say.
The company was looking for funding, but has since decided that it will open at least 100 stores across the country before seeking one. Initially it was difficult for the trio to convince the manufacturers about supporting them. “Like any new comers we had certain hiccups when we went to meet some prospective business associates,” remembers Mr Singh.
There was difficulty in convincing mobile manufacturers as it was a new concept to sell mobile phones with bundled services. Also, Nokia which has a dominant market share in the industry was not very keen on giving the same terms and margins as it gave to their priority dealers. But other manufacturers like Motorola were keen to support the chain.
Operators were more supportive though in a small way. They allowed Mobile Magic to sell branded phones with some freebies like caps and T-shirts. Some players like LG supported the company’s print advertisements by reimbursing half the amount. Things started changing after Mobile Magic crossed the 10-store mark.
“The mobile manufacturer realised that we were not talking in the air. They started dealing with us directly and our revenue share ratio improved,” says Mr Singh. “Now we don’t have to approach the players through middlemen,” he adds.
Recently, the company has tied up with Motorola to set up an authorised service centre for providing GSM and CDMA services to the users. “Things are beginning to look better though there is still a lot of ground to cover,” says Mr Palod.
Source : ET