Tuesday, January 09, 2007

Recycled ‘Seconds’ thought

Overheard in a second-hand scooter market —

Customer: Bhai, mera saat saal purana scooter kine da vik jaauga? (For how much will my seven-year-old scooter sell?)

Scooter dealer: Rate taan laa laange. Pehlaan grahak taan laab layiye? (We’ll fix the rate afterwards. Let’s find a purchaser first.)

No hyperbole. This is the state of affairs in market at present.

I was thinking about the ‘second-hand’ market in India for a long time but didn’t know how to put it in context. In his latest post, “Predictions for 2007,” John Grant mentioned about how a ‘second-hand superbrand’ can create opportunities for itself by extending the lifecycle of consumer products.

Over the last five years, second-hand market in India has gained immense popularity but restricted only to certain categories like automobile, books, apparel & accessories, footwear and furniture. Maruti’s ‘True Value’ and Arvind Mill’s ‘Megamart,’ Primus’s ‘Pennywise’ have managed to create a niche for them. Indian middle class are deal seekers; they are always looking for VFM products.

Well, I was thinking how to bring the thriving ‘chor bazaars’ of India into the fold of a modern retail banner. A typical ‘chor bazaar’ in Mumbai or Delhi or a ‘Sunday bazaar’ in Bangalore or a ‘College Street’ in Kolkata has some amazing items/books up for sale. Rare artifacts and items are available at a dirt cheap rate provided you really know the art of negotiating. Why not bring this dealers and shop owners under a “branded” banner? Restore, reconstruct these items for sale, add a seal of quality and service and sale them in the market. An excellent business model, this will make. Future Brands, are you listening???

Seconds Brand as a strategy can help in many ways:

  • Get first time buyers into your brand’s fold.
  • Provide them the assurance of quality and they will be more than happy to stick to you.
  • A service agreement which makes them feel that you really care even if it’s a used product (Big no-no to all ‘No exchange, no refund’ words)
  • Build a loyalty program (a genuine one with no fancy plastic cards and redeem points)
  • Extend the lifecycle of your product (copying from John Grant)
  • Slowly upgrade them to newer offerings over a period of time

Here’s how some brands can benefit from a ‘Seconds’ Store:

  • Apple/HP/Dell/IBM: Create an exchange program. Get all the old computers, restore them and sell it in tier II & III cities at a much subsidized rate. You as a brand help eradicate illiteracy and they will become your most faithful followers.
  • Harley Davidson: It’s a cult brand and Indian bikers will embrace it with grace. (Let’s stop thinking about Govt. rules for the time being.) Complete knockout units (CKU) of Harley’s can be brought to India. A franchise (assembly unit) put things in place and sales at an unbelievable low cost. Hell’s Angel rules.
  • Samsung/LG/Haier/Sony/Philips/Videocon: Restore all your used/defective white goods and reach out more people in smaller towns of India. Tie-up with Tata Sky and you’ll have a killer combo to enter the market.
  • Singer/Usha/Merit: Restore all your old used/defective sewing machines and reach those people, out there. You’ll create employment opportunity for them; brand loyalty will be a natural part of this program. So will be your opportunity to create content.
  • Hero Honda/Bajaj/TVS: Set up branded second-hand retail stores in Gujjri and other similar spare-part/second-hand 2 wheeler markets. Follow the Maruti ‘True Value’ model; you’ll create a new profitable revenue stream.

SULZER India Ltd, the Indian marketing arm of the Swiss textile weaving machinery major Sulzer Textil Ltd, is already widening its market base at the South Indian textile centers which have reported higher imports of second-hand looms. The growing number of used shuttleless looms imported by the southern weaving industry in recent months has inspired Sulzer India to strategize its marketing through customer-care for second-hand looms, as nearly 80 per cent of the projectile looms imported into the country were from the Sulzer stable.

They say consuming base of products and services in India is low, 60 – 70 million people at the moment which is expected to become 130 – 140 million in the next three years. I say, why wait for three more years?

Well, hire me and you’ll get 350 million more consumers into your brand’s fold ;-)


Kapil said...

A few years back I bought a Sony television from Vijay Sales in Mumbai. I sent in my old sony tv for an exchange scheme. For curiosity I asked what they did with the old sets. To which he replied that most of the sets we get are working so we do a few repairs, polish and sell them off into the interiors of the country.

This initiative was a retailer effort - If a larger manufacturer enters it, yes it could be a large scale effect. But a second thought which also emerges is that in the current scenario these companies will be more or less working on products priced low to fit the budgets of the "second-hand buyer" market.

pooR_Planner said...

Good observation Kapil. A white good manufacturer can indeed benefit if he plans his 'second-hand' products well. Firstly, people in the urban cities are moving to newer technology and aspiration products. So, they'll invariably go for the latest models or goods.
Secondly, instead of manufacturing low cost, low margin products they can restore and recycle the products that are already in circulation and sale it at a much lower price. In this way they can extend the product lifecycle, cut cost, focus on more technology innovation.
Thirdly, they can bring people from the interiors in their brands fold without much marketing initiative, remember over a period of time people from interior surely will move in the value chain.