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Sambhar Mafia - Cooked To Kill!

Wednesday, August 24, 2005

iFarm to sell apples in Chennai

Don’t get misled by the headline. I was trying to see how ToI would report this.

Apple Computers has appointed iFarm Chennai as a distributor / reseller for Apple products. iFarm has been started by alumni of GLIM. Their site doesn’t give much information. (via Vijayakrishna)

If Indian retail prices continue to be artifically high, domestic consumers will continue to rely on their friends, relatives returning from overseas to get the latest gadgets (Mobile phones, digital cameras, handycams, DVD players, PDAs, MP3 players) at reasonable prices. By the time some of the models reach Indian market, they might already be outdated in the international market. In recent times the mobile phone prices have started crashing in India and hence the price differential between an imported model and a local product is not that much. I understand that a differential exists in the higher end models. Why should we endorse such brands, which don’t give much importance to the Indian market? If the price anomalies vanish the Burma Bazaars might go out of business and the kuruvis (hand-carriers) will lose their jobs.

During my trips to India I have noticed each flight from South East Asia has atleast 20 big Yamaha keyboards and all these are brought in by the so called hand-carriers. Back in the 90’s I have bought two Yamaha keyboards from the Burma Bazaar and there is always the risk that the keyboard that you buy from Burma Bazaar might just be a refurbished one. I was too reluctant to buy a keyboard worth INR 22K from the Burma Bazaar as the guy selling it might turn out to be a fly by night operator. Why don’t the likes of Yamaha / Casio / Korg and Triton realize that there is a huge domestic demand for musical instruments in India. The consumers won’t mind paying a slight premium to get genuine products from the manufacturer / distributor. This logic can be extended to other products / brands as well. With increasing incomes and affluent lifestyles Indian consumers should be the darling of all the marketers. When I did a comparison of prices of Microwave Ovens I realized that the price in India was often 2 or 3 times than that of the price in S’pore. A 10 – 20% price difference is still digestible, but anything more than that is atrocious.

I was just reading an article in BusinessWorld that said that US brands are taking innocent Chinese customers by overpricing their products. Closeout brands in the US are commanding a premium in the US as the consumers are not aware that the brands might be past their prime. One argument in support for the price differential could be that the products might sell in large volumes in the developed countries and hence the need to price them lower, whereas the same product in India might sell in lesser quantity. I seriously urge them to do a survey of Yamaha keyboard users in India and they will realize more than 95% of them have bought from the Burma Bazaars and the hand-carriers.

Since I started with Apple let me share this news article with you.

11 Comments:

  • Whenever we think of buying an expensive electronic gadjet like laptop or high end digital cam we always try to approach our friends abroad who may be planning to come down and I know it is difficult fo r them too as they would have 10 such friends asking a favour.

    By Anonymous vasanthi, at 6:41 PM  

  • Good title. Was mislead even before I read the 1st sentence :)

    By Blogger Jayan, at 7:39 PM  

  • Kaps,

    Well, there are multiple dimensions to the problem

    1) Tax/import duty for such goods by the govt - that, as i gather (may be wrong) contributes to a large extent the premium

    2) Profit by volume, may still not fetch that much as yet - keyboards/musical instruments are still a niche segment...

    3) most of these are manufactured in outsourced manner and hence any profit that these makers get are via the mark-up, so unless and until they can get to to do 1) & 2) successfully or start manufacturing locally - the prices may not dip that much

    good thoughtful post !

    By Blogger Arvind, at 10:46 PM  

  • Times would have rather this headline:

    "Chennai now has Apples that cost thousands of rupees"

    :-)

    By Blogger thennavan, at 12:03 AM  

  • kaps
    ennamadiri keyboard you have
    I have one midi evolution and recently got myself yamaha dgx 203 for piano practises.

    By Blogger Ganesh, at 1:10 AM  

  • The problem I think (as arvind pointed out) is that

    1) The import duty slapped on products being brought in is pretty steep, so the price differential will always remain.

    2) The whole economies of scale argument kicks in, if you want to sell in India, you are going to have to provide after sales service and support. This makes no sense unless you have a critical mass.

    2) Most importantly, a decision to enter a new market by any manufacturer is an economic decision. Indian is too much of a niche market in most high end consumer electronics (as say compared to most South East Asian nations). It takes away key management resources to enter india to sell these products without adequate return.

    The only way most manufacturers can counter this problem is by using resellers the way apple seems to have done.

    By Blogger nmk, at 9:16 AM  

  • Kaps,
    I agree with u regarding the Keyboards issue... was very apprehensive about spending more than 20k on a keyboard which u are not sure was new... But had no other go.. I had to get it from Burma Bazaar :-(
    There is definitely a huge demand and the burma buzaar ppl are the ones who are benefitted

    By Blogger Aravind, at 10:13 AM  

  • I totally totally agree with you.We are so much brand conscious when it comes to electronic goods and the foreign countries are counting and cashing on that USP

    By Blogger Suguna Purushothaman, at 6:31 AM  

  • Indeed, I was misled by the title intially..

    By Blogger Ram.C, at 1:18 PM  

  • @Vasanthi,
    That's the current practise

    @Jayan & Ram,
    I expected this

    @Arvind,
    Govt. has simplified the taxes....especially if the products are below Rs. 25000. I think the volume might justify. India's volume can be as good as Singapore's volume if the prices are on par. Now the Singapore volume is higher bcoz people are buying here and shipping it to places like India.

    @Thennavan,
    Good suggestion

    @Ganesh,
    Have replied to u.

    @NMK,
    When the govt. has allowed one laptop per person why don't they allow high end electronics / audio visual like keyboard etc?
    With more money flowing into India, I don't think keyboards will be considered out of reach.
    further there are more kids learning such things when compared to say 5 years back or 10 years back

    @Aravind,
    I think each one of us go thru this

    @Suguna,
    very true

    By Blogger Kaps, at 11:16 PM  

  • Kaps:

    Those hand-carriers that you mentioned have a very interesting name: kuruvees (sparrows?). I think that is what you were referring to?

    Kamla

    By Anonymous Kamla, at 2:21 AM  

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