In the crowded premium TV market, dominated by mega-brands such as Sony, Samsung, LG and Panasonic, home-grown Vu TV is a minnow. It made a modest debut in 2006 and has been retailing its products that mostly consist of large premium televisions (that cost between Rs 30,000 and Rs 300,000) through offline and brick-and-mortar locations spread across 800 stores nationwide. From this month, it is looking to add a new channel to its sales network: Direct-to-consumer, or D2C.
The objective, the company’s founder and Chief Executive Devita Saraf
explained, is to connect more deeply with India’s younger consumer audience. Arguably among one of the largest in the world, this is a segment that could accelerate sales, especially if it is via a digital channel.
Her company will retail its TVs through the website Vustore.com and Saraf says she will, by and large, aim to service the same spread of geography that her brick-and-mortar network does.
“We went youth-first when we started out and as the market is largely driven by a digital-first group, it follows naturally to continue to keep our pulse on a young audience today,” she said. It’s no secret that the last couple years have spurred an adaption to online commerce across ages and product and industry categories.
Saraf broke the mould when she started her company by becoming her own “model-CEO” ambassador to endorse the brand as well as challenging the incumbent duopoly of electronics giants Samsung and LG in terms of mindshare and brandshare — which most new entrants in consumer electronics tend to avoid.
She went on to add that audiences have evolved significantly over the years, and the current consumer base, which is a large part of her industry’s total addressable market, or TAM, is in their twenties and an entirely tech-savvy breed.
“They (the youth) want to communicate and buy directly from the brand, which is why across the world companies
are going D2C,” Saraf said. Internationally, from Dollar Shave Club to Warby Parker, and in India, from Mercedes-Benz to Lenskart, companies
have adopted D2C as an augmented way to reach their buyers.
Saraf said her market research shows that larger flat-screen TV buyers are typically in the premium and high net worth (HNI) income category and, therefore, tend to watch English-and Hindi channels as well those in a few South Indian languages. There are two audiences for VU — HNI and then what Saraf calls the “HENRY: which is short for High Earner but Not Rich Yet, and likely to segue into an HNI at some stage. Devangshu Dutta, CEO of management consultancy firm Third Eye Research, said, “For any smaller player looking to compete in a sector dominated by larger players, going the D2C way is not only margin-friendly but also ensures that it creates a certain mystique around the brand that allows it to connect with consumers in a way that’s more special than buying from a store.”
The D2C route protects margins, he explained, because it enables brands to lower costs of customer acquisition while growing their business. Of course, “the key is in being able to manage that cost smartly and keep business growing, which is not always easy to do”, he added.
Vu’s approach is certainly ambitious. The company, with a pre-tax profit of around Rs 60 crore, will be investing Rs 50 crore in its DTC platform across two broad areas — customer acquisition cost, which computes the lifetime value of the customer and manages everything from the way the customer shops and closes on a deal, to the framework in which it all happens.
“That includes the back end, the front end, the exclusive call centres, which have been set up in addition to Vu’s existing 300-team call centre and customer support division,” Saraf said.
The DTC division will have a separate team of 30 people based out of Mumbai to help assist customers and offer information and data on product.
Vu Store went live on December 1, and is housed in a new retail business called VU D2C Private Limited.
Saraf says it will take two days to deliver in Metro cities and between four and five days in smaller towns (the company has assembly plants in Tamil Nadu and Andhra Pradesh). “We won’t scale back on or replace our co-existing channels; this is not a shift to another model but is a growth strategy,” she said.
In terms of customer segmentation, the flat panel TV trade itself is seeing several new trends emerge. Others include leaning on QLED technology versus OLED because research shows that people in India watch TV in bright environments and not in the dark. “OLED has a sharper contrast and QLED is brighter,” she added. Increasingly, her industry also finds opportunities to diversify and increase a portfolio into other categories. “The entertainment category is very large and with the use of TVs and screens for education and entertainment, there are multiple product extension possibilities in the future,” Saraf said, adding that gaming video conferencing, and education conferencing are all growth areas.
What are the challenges that VU foresees with D2C? “Reinventing the overt customer experience and being innovative requires one to be consistently on the edge, through adding new experiences, and that will be interesting to achieve and target,” she said.
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