A new one-stop act by Multiple Zones

Mail order-based IT marketing is just about making a mark in India,Josey Pulieynthuruthel reports on the experiences of MZI.

Business Standard
16th June, 1999

For one and a half years starting April 1997, Manpreet Singh made the mistake all information technology managers tend to make. As managing director of Multiple Zones India Pvt. Ltd. (MZI), a mail order IT products company delivering a wide range of brands and models to your doorstep, he sought inspiration from the US market and focussed entirely on the home segment.

"The gurus kept telling us, hit DLF and other high networth residential areas and you will get results. We kept dumping the (bi-monthly) catalogue (called The PC Zone)", Singh recalls. Eighteen months and some burnt fingers later, he decided there was something wrong with the strategy MZI was following. "It was very difficult to move the home segment, The market we were talking about was not right."

But there were other segments in the 2.5 million PC markets waiting to be explored. From focussing on homes, Singh and MZI have switched to some clever side-stepping more suitable for selling in Indian conditions.

Their plans now are big. "On a conservative estimate, we expect to reach a turnover of Rs. 120 crore by 2001 from the Rs. 50 crore anticipated by the end of this calendar year," the managing director reveals. MZI recorded sales of some Rs. 35 crore last year.

Through PC Zone, MZI offer hundreds of IT products from laptop computers to servers, from printer cartridges to top-end scanners, from floppy diskette boxes to high-capacity hard drivs??. . It stocks products of Microsoft, Compaq, Apple, Intel, IBM, HCL, HP, Zenith, Toshiba, Motorola, 3 Com, and Philips, to name a few. Basically a one-stop shop for all IT products.

Although its product range addresses a cross-section of customers, MZI is essentially focussing on the small office, small and medium business, corporate segments and some bits of the enterprise market. Explains Singh: " We discovered that the family and home segment is really not moving. These are mostly first time users and the catalogue model does not blend into this market. The return on effort is low here because it is primarily support and demo(nstration)-intensive and, of course, there is no potential for a repeat sale."

At the other end of the market, the buyers are enterprise, government (including defence), and user like banks, financial institution etc. These, according to MZI, are tender (or-request for proposals) based businesses and do not fall under direct response or catalogue based sales. Typically, a government buyer floats a tender through an advertisement and waits for offers to trickle in.

Instead, reckons MZI, the small office, small and medium business, corporate segments and the entry-end of the enterprise market are comparatively easier to enter and acquire customers. Based on market estimates made by IDC (International Data Corp, a market research and analyst outfit specialising in IT), Singh reckons, the addressable market to be over Rs. 3,600 crore a year (56 per cent of the total market for IT products, which according to IDC is nearly Rs. 6,400 crore).

MZI strained that market opportunity further. Explains Singh: " Even in the 56 per cent of the market that we are interested in, we are not catering to the solutions market per se or to the high-end of the box-solution market. And, we have bases in only three cities ? New Delhi, Mumbai and Bangalore. This left us just 10 per cent of the market." But being focussed led to better targeting which translated into better sales.

Some of MZI?s corporate byers include Ericsson Communication, Nokia, Escorts, Bank of America, Hughes, Westinghouse, BPL, Living Media and Larsen & Turbo. As the trend of ordering through catalogues catches on, Singh expects to leverage his 100,000-strong database more productively.

The prices that it offers, says MZI, are the best in the market and has a ?Guaranteed Low Price? scheme on offer. "Computer price change all the time. If you find any item advertised for less in a current national catalogue or publication, we will match their in-stock price," according to the latest The PC Zone.

MZI manages to offer better prices than most computer resellers because it shaves off high-cost links in the supply chain, according to Singh. "Normally, the principal (computer maker) sells the products to a supplier who then passes it no to a reseller. We directly pick it up from the principal eliminating costs and operate at a low margin of 8-9 per cent," he says.

MZI is putting in place two key elements to its selling strategy in India: One, a call centre and, two, a web-based www selling plan. The call centre is expected to cost the company some Rs. 2 crore, but Singh reckons its productivity will more than cover the cost. A call centre receives calls from customers (anywhere in the country, if it is a national call centre) free of cost (MZI picks up the call charge) and helps an operator intelligently handle it.

For instance, three months after a printer sale has been concluded, the call centre will automatically put a call through to a customer and route the call to an operator?s screen giving her details of the customer, the sale and after-sales requirement. A three-month-old printer would in all probability need a cartridge replacement and a call to the customer results in another sale being concluded.

The web strategy involves not just selling over the Internet, but creating an ombudsman that first-time customers repose their faith in and are reassured that they are paying for something genuine. "Customers can turn to the ombudsman [likely to be an eminent personality] if they have any complaints against MZI, is all that Singh is willing to reveal.

The business on the web is not expected to pull in the millions ("I would love to count notes from business on the web, but it will not happen," says Singh), but when competitors like C D W, Global, Microwarehouse and even web-based IT sellers like www.egghead.com move into the Indian market, MZI would have a lead difficult to beat.

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