3 min read.Updated: 28 Aug 2015, 07:02 AM ISTMihir Dalal
Keen to avoid past mistakes,BPL keeping investmentslow,may outsource a part of its manufacturing
Bengaluru: In the 1990s, BPL was to televisions what Nirma is to washing powder and Bata to shoes: a household consumer goods brand (it helped that actor Amitabh Bachchan promoted the brand).
Until it was driven out of the TV business in the late 2000s because of competition from the likes of Samsung Electronics Co. Ltd and LG Electronics Inc., weak finances and a feud in the family that runs the company.
Now, BPL Ltd is attempting to reclaim its past success by not only improving the technology that goes into making TVs, but by embracing e-commerce, a channel that many of its rivals detest because it is eating into their core offline business.
BPL has tied up with India’s largest online retailer Flipkart to sell TVs, refrigerators and washing machines.
The company, which started selling on the online marketplace on 15 July, launched three variants of LED and high-definition TVs priced between ₹ 11,000 and ₹ 28,000, single-door refrigerators starting at ₹ 9,000 and semi-automatic washing machines starting at ₹ 7,000.
“We went through a bad patch; every company goes through good and bad patches," chief executive officer K. Vijaya Kumar said. “But our brand resonated with customers and they wanted us back. Even though we exited, we (retained) our medical devices division, rechargeable lights and home automation products. It’s not that we had fully exited, we were just not in the mainstream. Now, we’re coming back into the mainstream," he added.
BPL plans to sell only on Flipkart for now, Kumar said.
After BPL’s joint venture with Sanyo Electric Co. Ltd ended in 2008-09, the company cut costs, restructured its business around making medical devices, home automation products and lights.
BPL entered a five-year licensing deal with Reach Distributors India Pvt. Ltd, giving the latter rights to use its brand in colour televisions, according to media reports. As the deal neared its end, BPL began planning its re-entry into TVs and other large appliances.
Keen to avoid past mistakes and keep costs low, BPL is keeping investments low and looking at outsourcing a part of its manufacturing.
“Today, our cost management, customer understanding, product road map is much more robust than what it was before. We have a much tighter cost mechanism and our fixed costs are much lower today. We’re focusing much more on customer orientation and building innovative technology than on building factories. We have a certain in-built capacity; once we utilize that, we will be looking at OEMs (original equipment manufacturers)," Kumar said.
Unlike rivals such as Sony Corp. and LG, BPL has set much store by e-commerce.
Many consumer durables makers have often complained about heavy discounting by online retailers and have taken several measures such as refusing to sell to e-commerce firms and denying warranty services on products sold online to try and curb e-commerce sales, which eat into their offline store business.
Flipkart gives prominent positioning to BPL products on its platforms, handles logistics and helps with online marketing in exchange for a fee.
“Our thinking is that the e-commerce business in India will grow fast and we want to be part of that growth," Kumar said.
So far, BPL’s products have been well received.
The TV sets have been one of the fastest-selling products launched on Flipkart, said Amitesh Jha, vice-president-retail at Flipkart.
“The sales have surpassed our expectations from day one. BPL has been positioned as a value brand and we haven’t given discounts except when there are sale events or day-specific price-offs. We’ve been heavily marketing online and the emphasis has been to get people to identify with the BPL brand rather than just marketing a television set. People who are viewing the brand on our app are spending more time on it, compared with the time spent by people who view other brands. So, clearly, people still identify with the brand. A lot of folks who grew up in the ’90s connect with the brand," Jha said.
Both Flipkart and BPL declined to provide exact sales numbers.
In the run-up to Diwali, BPL will launch more products such as high-definition TVs, frost-free refrigerators and fully automatic washing machines, Kumar said.
While BPL products have done well so far, brand re-invention is tricky, experts said.
Additionally, sales of consumer durables such as TVs and refrigerators have been weak for three years because of rising prices and slowing economic growth.
“Though BPL may still have brand salience, the key to success will be the quality of the product and technology," said Kiran Khalap, founder of brand consultancy Chlorophyll Brand and Communications Consultancy Pvt. Ltd. “Margins are thin in consumer durables, so they will need cutting-edge technology and a strong pipeline of products to succeed."
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