November 8, 2016

Licensing industry rejoicing over eRetail

India as a market for licensed merchandise has evolved a lot and hence has the demand. The consumers no more want a product with brand logo ‘slapped’ on it but are looking for variations. While the traditional market is revamping itself to tap the evolved demand, eCommerce players have fit themselves between the de...

By Licence India Bureau

India as a market for licensed merchandise has evolved a lot and hence has the demand. The consumers no more want a product with brand logo ‘slapped’ on it but are looking for variations. While the traditional market is revamping itself to tap the evolved demand, eCommerce players have fit themselves between the demand and price clashes and demographics that were always a concern.

Noticeably, a majority of licensed retail market is dominated by unorganised players and therefore, the availability of products is dependent on the understanding and choice of distributors rather than the trends.

Anand Singh, Director – South Asia, Turner said, “Earlier the licensees who use to produce or import the products which were character licensed, they went completely on the whims and fancies of the purchase managers and purchase heads of the large format retail chains.”

Moreover, the spending power of a city also affects the demand and availability of licensed merchandise. In simpler terms, a retailer in a small town of Jaipur may not be willing to stock merchandise of Powerpuff Girls fearing inventory blockage due to ‘demographic sensibility’ based on his understanding of the catchment. But, on the contrary, there may be some ardent admirers of this series elsewhere.

Meanwhile, sensing the enormous potential that is yet unlocked in licensing and brand merchandising industry, eCommerce players have fit themselves between the demand and clashes of price and/or demographics.

According to industry reports, eCommerce contributes around 5 to 7 per cent of the total revenue from licensed merchandise. Backed by rising use of smartphones, the Indian eCommerce market is poised to grow 36 percent during the 2015-20.

eCommerce putting the blocks in place

If you look at licensing as a business in general, there have been three major problems behind the sluggishness in the industry and rising number of counterfeits. First problem is of asymmetry. Back in the days when a movie released in US, it would take good couple of months before even the people of India would come to know about it. Now in the age where releases are simultaneous, people are aware through internet, thus addressing the first issue.

The second problem was distribution. People have always loved the characters, but they were not able to find the original merchandise, which is why a lot of local and counterfeit products flooded the market. And third was the problem of price-points as official merchandise use to be priced higher than the generic ones. This is where eCommerce fits in the entire scenario.

In words of Abhijeet Dabas, Senior VP- Brand Director, Myntra, “Now we have a platform where distribution is not a problem, the information is readily available. The only challenge now is to create a product that uses the licenses which already enjoy a brand recall at an affordable price.”

‘Click’ channelising the licensing industry
Adhering to the changing dynamics of retail, the online players have swiftly moulded themselves and most importantly, have recognised L&M industry as an integral part of retail. The modern format of retail stores and MBOs helps to cover and create brand experience in metros as well as sub-metros. As per Akhil Saxena, Director Operations, Amazon India, over half of their traffic and sales come from Tier-II and Tier-III cities just as over 50 per cent of the sellers come from non-metro cities too in India.

Moreover, L&M is sought to be a very metro-oriented concept, leading physical retailer of a small town to keep away from such merchandise, however eCommerce addresses to demands irrespective of the demographics.

Striking a similar opinion, Saugato Bhowmick, SVP – Consumer Products, Viacom 18 said, “Modern retail helps to cover and create brand experience in top 20 cities, whereas eCommerce has wider reach. Via digital retailing, nearly 400 towns of India become immediately accessible as more than 50 per cent of revenue of eCommerce sites comes from small towns.”

Checking on counterfeit merchandise a challenge
While eCommerce is changing the way L&M industry operates, there exist some areas demanding special attention. The expansion of counterfeit merchandise is being pumped up by eCommerce as the portals lack mechanism to check licenses of retailers registering on portal resulting in quite a handsome sale of counterfeit products online.

Moreover, many a times, counterfeits are sold by some well-known brands. Nevertheless, the strong growth prospect of the licensing industry has helped the licensors to remain ‘bullish’ about their offerings.

 

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