LEDs have created a revolution in the past few years. From impacting households to lighting up offices, the technology has become a vital part of our lives. LED Bazaar gives its readers a chance to judge whether the best way of buying these products is online or offline
For most of us today, wanting to buy something often involves typing the words in the Google search bar to check where we can find it on the Net. These days, mobile apps have made life even easier. No wonder the online players are making it big in the market. After all, the Internet provides great convenience to any buyer — just click a few links here, type a few words there and voilà, the product arrives at your doorstep in a few days or even within hours, sometimes. The cherry on the cake is the heavy discount that offline shopkeepers cannot afford to give. Besides, the customer also saves on the time wasted travelling and other hidden costs.
How the game is played
When it comes to LED lighting, all popular e-commerce websites including Flipkart, Amazon and Snapdeal sell in any quantity, accompanied with discounts. These days, even some LED brands like Bajaj Electricals Pvt Ltd (shop.bajajelectricals.com) and Philips India (www.buy.philips.co.in) sell their lighting products online.
LED components are also sold by online players of a different league. This part of the online LED business is led by players like Arrow Electronics, Avnet, Element14 and Mouser Electronics, among others. Even though these names remain unknown to the general public, every stakeholder from the electronics and LED industries will know how important they are.
The way companies see it: Although a lot of LED lighting companies seem to prefer the online market to sell their products, some of the leading ones still prefer the conventional mode of distribution, with channel partners in all parts of the country to make direct sales through them. One could argue that this option, though followed for generations, cannot be called conventional because channel partners currently use a lot of innovative techniques like ‘experience centres’ to sell their products.
When LED Bazaar spoke to those at the Havells corporate offices, they talked of expanding on the concept of experience centres, which prove highly useful since they allow potential buyers the chance to first experience these lights – something that’s not possible while shopping online. Apparently, these experience centres also positively impact consumers since they are usually happy about the fact that they can experience a nice lighting solution, while somebody supplies them with the right knowledge. At the same time, they are not being forced to make a purchase. This good first experience often leads to product sales in the future.
When we enquired about why firms like Havells prefer physical channel partners, we were told that the company has a total of 125 channel partners in Delhi NCR. That makes its network so strong that it does not need the online market at all. Besides, it has found that it is easier to arrive at mutually satisfactory terms and conditions with physical channel partners, small or large. Havells’ distribution model is such that it prefers dealers and distributors to do the final sales for it.
The impact of the online market: What we gathered from our interactions with Havells is that the booming online market has certainly hit the sales in the offline market. The reasons are:
- The market operating price (MOP) of any LED lighting product sold online is not consistent. The products are sold via schemes and offers, as per the convenience of individual firms. This hits the offline dealers and distributors since they cannot change their MOP so easily.
- The online market often changes the selling price by huge margins. For instance, if an LED light is priced at ₹ 600, the next day it might be sold at a price of ₹ 400 due to some weekend offer or day-specific offer. The offline market can never afford to do that.
How brands counter this: Brands like Havells that deal in multiple products are not that affected by the e-commerce revolution because a minor dip in their lighting sales hardly affects the overall business of the company. So there has not been a need for strategies to counter the online market. However, Havells encourages all dealers and distributors to sign an agreement with the company directly because that way they can provide better profit margins to the channel partners.
The dealer advantage: One very important reason why a lot of LED lighting brands prefer physical channel partners is the after-sales service. To start with, the offline market always offers warranties of longer duration as compared to the online dealers. Besides, offline dealers are physically present to attend to every minor complaint of a customer. They are even happy to replace the product, in case the need arises. And they are always easier to reach in the hour of need. This is why a lot of companies feel that even if offline dealers charge consumers a few bucks extra, the after-sales service will always be better than what any online player can offer.
The offline perspective
While exploring the LED lighting business, we went into the narrowest bylanes of Delhi’s most prominent light market—Bhagirath Palace in old Delhi’s Chandni Chowk area. Speaking to some of the bigger wholesalers, dealers, distributors and retailers of LED lighting products, we got mixed responses. Some of those in favour of the offline business mentioned the following reasons for their preference:
- When it comes to buying lights, Indians have not entirely accepted the online market because people prefer to look, feel and understand the lights through first hand experience. They believe it to be the most reliable way to check whether or not the quality standards of the lights meet their requirements.
- The offline market provides a wide range of choices when it comes to the type of LED lights that are sold. Shopkeepers believe that these lights can never be purchased without being inspected, physically. Particularly in the case of designer lights, it is a difficult task to convince customers about the quality of these lights and the unique experience they offer. This is the why the e-commerce websites have not been able to affect the offline sellers till now.
- The owner of one of the most prominent stores in Bhagirath Palace feels that Syska, Bajaj and Philips can afford to sell LED lights at a heavy discount because these companies are so big, that they do not mind incurring a few losses in exchange for popularising their products in the market. In short, a major chunk of the money lost in discounts comes from the advertising budget of the company.
- Big corporate houses can never place a bulk order for a certain type or number of lights without first witnessing their real luminance quality. This sets online players a few notches behind, in the race.
- At times, two similar products can create a lot of confusion when sold online. They may belong to the same brand or two different brands. But similarity in looks, features and specifications can create confusion. Someone who does not compare the two by looking at them physically, can never tell where the real difference lies. This can also be because no expert will be around, to guide customers when they’re online.
- A lot of shopkeepers feel that many of the online sellers of LEDs trick their customers by offering fake discounts, wherein the products are first overpriced without the customer’s knowledge. But when customers visit an offline store, they might find a better quality product at a much lower price. At least these stores cannot fool customers since they could come back to complain.
What plagues the offline market: The domestic offline LED lighting segment might not have been affected by the ‘touch and feel’ factor associated with direct buying, but the commercial offline lighting segment has seen a considerable dip of around 30 per cent in recent years. This is due to the bulk orders that can be placed online and e-commerce companies offer substantial discounts on such orders. What is interesting to note, is that despite e-commerce companies not offering any after-sales service to customers, there does not seem to be any significant dent in their sales. Many LED wholesalers are of the opinion that the price difference is so alluring, that customers are willing to forego after-sales services, as they believe that the price difference more than makes up for any quality issues that might crop up in the future.
Here again, there is a difference in opinion between wholesalers and retailers. While wholesalers are not involved in after-sales services, retailers are often required to service the customers. Many online portals offer free replacement to customers, which is an added advantage for the latter. What further adds to the woes of the retailers is that often customers visit an LED showroom and after getting a clear idea of the product and its specifications, return home and order the product with similar features, online.
What marginally eases things for offline players is the physical condition of the final delivered product. E-commerce sites have often received flack for not delivering what was promised. This works in favour of retailers since their market is localised and transportation does not involve heavy logistical liabilities.
Our verdict
Analysing the situation from a farsighted perspective, we feel that the cut-throat competition between the online and offline LED markets will be an ongoing battle. Both avenues come with their own advantages and disadvantages. What we hope for is a customer-friendly market space where the end consumers of LED products are heard and their suggestions implemented.
By Samonway Duttagupta and Anwesh Koley
