Re-Invent or Resent: What must we do to Survive & Flourish in IT trade?
– Umang Lalani, Director,Lalani Infotech Ltd
Date: 18th July 2018
Post GST the trade has never been the same again and it continues to change and evolve every single day. So what should an IT Dealer/Retailer/Distributor do in a super competitive environment due to GST and an already super flourishing online trade leading to a much informed buyer?
A lot of trades are already facing such challenges, but the IT trade has an even bigger challenge, due to already lower margins and standardized products.
We must embrace the change that we are living through and make plans accepting the fact that the climb is uphill, and we can only survive if we do something different than what we have been doing pre July 2017 !
1.GST: Geographical Stretch Time
We must not rely on doing business in only one City or State, we have a large market available to us in terms of entire India, and we must reach out to more customers. Retailers should open more stores within or outside their states depending on their interests and other consideration or start trading online to reach out to more customers.
Distributors must start other states to reduce their dependency on the business trends in their current state/territory and build more consistent businesses, or trade on B2B portals.
If you are not expanding then you are definitely contracting.
2.Diversify
We hear this a lot of times from lot of people, but it has never been more important than now to Diversify! We must not be engaged only in the traditional IT retail any further. With the current overheads a Retailer must diversify the products and services offerings. Start selling Smartphone’s, accessories, mobile accessories, TVs, Consumer Durables, start laptop servicing, start taking AMCs etc. Do something to make your customers come back for more reasons than just a product.
Distributors must add products in mobility, telecom, accessories, consumer durables, software’s or any other category which could be connected to IT or which would eventually converge into same fraternity in time to come.
Change today by choice or time will force you to change by design.
3.Inventory Watch
With the depleting margins scenario, idle inventory must be eliminated completely. Retailer Inventory on every product line must never be more than 15 Days, no matter what. Unless inventory is less than 15 days, profitability will always be a major challenge. Retailers must wake up to this fact and meticulously plan inventories accordingly. In a scenario if they are stuck due to target backend or schemes, they should always calculate the loss of profit Vs loss due to over inventory while making a buying decision and not be influenced by history or relationship. If it is still unavoidable due to payout loss, they must correct the inventory in the very next month to avoid losses in the next month. They should not postpone decision making on this.
Distributors must not work above 21 days of inventory in any product, with the current channel credit situation; working on above 21 days would be detrimental to the future health and expansion process for the organization considering margins are low. Also should not offer credit above 30 Days to Retailers.
4.Profitability
Direct Profitability for Retailer cannot be increased drastically, but by employing lesser working capital due to 15 Days stock, better product mix with accessories and other product lines with higher margins it can dramatically improve. Choose the right brand rather than “right now” brand; Brands which will be present even in future to take care of you.
IT Distributors should not distribute any products with margins less than 4-5% , anything below that is unsustainable, if someone is working below that with an adequate infrastructure then he or she is losing money every day without even knowing about it.
Some of the things might sound impractical today, but if today we do not do it by choice then tomorrow we will be forced to do so for survival.
Lalani Infotech Ltd, head quartered at Kolkata celebrates its 40th Year in IT Trade in 2018, yet it has re-discovered itself by following the above principles.
A year before GST, we started reaching out to major geographies by reaching out to customers via the online medium. Brick by brick online team was created which eventually culminated to Lalani Infotech getting the award of the “Largest Seller from Eastern India” from Amazon for the Year 2017-2018.
In distribution front we started expanding aggressively in geographies beyond Eastern India, currently the group has over 300 employees spread across all Northern, Eastern, Central, Western and Southern states of India offering products and services.GST has made it so much simpler to operate in all territories. With own offices in New Delhi, Mumbai, Orissa, West Bengal, Bihar, Jharkhand, Assam & NE, Chhattisgarh, Uttar Pradesh and allied offices in other parts of the country, we are growing our network to grow with the changing times.
