This summer AC makers bet on online sales

As the sultry summer heat sets in, AC makers this season are upbeat on online sales. According to the industry, around 8-10 per cent of total summer sales can come from e-commerce sites.

According to Sunil Shankar,product head, AC, MIRC Electronics that manufacturers of home appliances under the Onida brand, "E-commerce is here to stay, and this season would be one of the first times that a significant share of summer sales would come from such sites. Last year, a few sites and AC makers had just started testing ground."

He added that last year the industry had grown by 12-13 per cent, owing to delayed summers. However, this year, the industry is expecting a 15-20 per cent growth. As of now, Onida sees nearly 5-6 per cent of its sales coming from e-commerce sites.

Tony Navin, senior vice-president, electronics and home at Snapdeal.com said, "We have tied up with both national and international AC brands. In terms of ACs, Snapdeal's volume of business has grown over 15 times in 2012-13 and 20 times in 2013-14." Snapdeal expects ACs to constitute a significant percentage of their overall white goods sales this year. "Rising mercury, competitive pricing and innovative technologies will see ACs garnering significant percentage of overall white goods sales this year," Navin said adding that air Conditioners are increasingly becoming a must-have appliance in most middle and upper middle class household despite their high cost of purchase and maintenance.

The overall market penetration of ACs is currently around 3-4 per cent, as category it is in its nascent stage and therefore, has a significant potential to grow. The size of India's AC market is around 375,000 units per annum and the the market for room airconditioners is expected to grow by around 15 per cent in FY16. Not just AC players, but cooler manufacturers like Symphony too are upbeat on online sales for obvious reasons, and have also introduced exclusive models for online portals. Achal Bakeri, founder and CMD of Symphony Ltd, said, "E-commerce business has been growing steadily for us and this year we expect to achieve healthy growth from e-commerce. To have a greater focus, we have introduced exclusive air cooler models for e-commerce and expect this to accelerate our growth."

The company expects at least 3-4 per cent of its sales to come from e-commerce sites this season. It has already tied up with all leading e-retailers like Flipkart, Snapdeal, Amazon, Shopclues among others.

However, some players think that while e-commerce is here to stay, the strategy of predatory pricing to attract customers might not work in the long run.

B Thiagarajan, executive director and president, AC&R Products division, Blue Star said, "Online buying of ACs is picking up as a trend. One of the reasons being company-owned e-commerce portals coming up in recent years, apart from leading retailers opening their portals."

Thiagarajan feels that another option could be that each of these e-commerce portals like Flipkart, Snapdeal to have dedicated space on their portals where companies can buy space.

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