Surviving Competition – Regional Mobile Operators Strategize 4 Sep, 2008

The evident demand for mobile phones in India has created a very interesting business and entrepreneurial opportunity for the nation’s retailers – setting up mobile stores.

With the call rates and handset prices declining day by day, the mobile retail sector is creating a ripple in the Indian market. There are two segments fighting for space in this sector – retail stores backed by known corporates, and the traditional shops that rule regional India. Who will win this tussle?

“Business opportunities are like buses, there’s always another one coming”

–Richard Branson

Clearly, the advantage that regional players have is that of location; set up in the interiors of the country, these mobile retailers are able to reach the untapped target audience. More importantly, they are able to understand the psyche of their consumers, who usually come from the same geographical location. Price is also an advantage for retailers such as UniverCell, Sangeetha and Global Access, because their relatively small size allows them to change prices within two hours of the market price change; bigger stores, however, take 2-3 days to solve the issue.

In this scenario, the competition being generated by corporate-backed mobile retailers has come as a surprise to the regional players. Retail outlets such as The MobileStore (Essar and Virgin), HotSpot, Subhiksha and Mobile NXT are setting up shops countrywide. While some like HotSpot have tied up with neighbourhood stores as their franchisees, others like The MobileStore have stuck to investing in their exclusive outlets.

In a country like India, where more than 70% of the mobile retail sector is unorganized, the franchisee model seems to spell the way ahead.

As mobile penetration continues to grow in the Indian subcontinent, mobile retailers – organized & unorganized – are fighting for their share of the pie in the urban, semi-urban and rural parts of the country.

What remains to be seen is whether the struggle between the regional mobile retailers and the national mobile retailers will continue, or if they’ll come together to fulfill the demand of the next billion mobile users.

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