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RCom stores to sell multiple brand handsets
By siliconindia
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Thursday, 05 November 2009, 18:18 IST
Mumbai: A subsidiary of Reliance Communications (RCom), Reliance Webstore, will now sell mobile phones of various manufacturers through its stores. Reliance Webstore has already signed up with 1,200 handset retailers and multibrand outlets in 100 cities to act as a distribution centre, reports Livemint.
Reliance Webstore had been selling handsets designed for RCom's wireless services. It operates a chain of 234 Reliance World stores. The telecom retail business currently contributes a minimum of 50 percent to Reliance Webstore's annual revenue.
"Customers will be having more choice in our stores that will be acting as hub or warehouse for multibrand handset retailers. Till this time, no retailer has become a distributor," said Swarup Chowdhary, Director and Chief Executive Officer (CEO), Reliance Webstore.
RCom will adopt a hub-and-spoke model, where one store will supply to five-six handset retailers in the same region.
"The decision to sell multibrands and entry into distribution will yield three things. Firstly, it will lead to much larger throughput, (secondly) there will more people to sell our products. Lastly, customers will be having great flexibility to get different models just in time," said Chowdhary.
The move comes after RCom's agreement with Coolpad Communications, the Indian joint venture of Hong Kong listed China Wireless Technologies, to market and distribute its dual-mode smartphones in India. The dual-mode phones can access both Code Division Multiple Access (CDMA) and Global System for Mobile Communication (GSM) networks.
According to reports, for the 12 months ended June, mobile handset sales grew 6.7 percent to 101 million units in 2009. India has around 440 million mobile subscribers, with adding around 10 million a month on average, according to data from the Telecom Regulatory Authority of India (TRAI).
According to the analysts, organized national retail chains might gain as the mobile handset retail space is very unorganized.
"Besides Nokia's stores and the MobileStore, there are not many players with significant national visibility and reach, thus leaving room for new entrants to establish their presence," said Prashant Singhal, Telecom Advisory Head, Ernst and Young.
Also, pricing will be a key factor and being a distributor would give RCom a 'greater margin to play with.' "Being a distributor and having a national retail footprint will also help in reducing overall inventory costs," said Singhal. The operational efficiency would also make a difference as sales margins on handsets are "wafer thin", added Singhal.
