Matching the consumer durables pace
Fuelled by rising incomes and growing affordability, the consumer durables market has seen a remarkable growth in the past few years. Consistent increase in demand has put pressure on Logistics Service Providers (LSPs) to offer best of services by maintai
Consumer Durable industry is hitting the highest point. As per Indian consumer durable industry analysis by IBEF, the consumer durables sector revenues reached US$ 9.7 billion in FY15 and is expected to reach US$ 12.5 billion in FY16. The market is expected to grow at CAGR of 13 per cent from FY05 to FY20. With the continuous flow of disposable income, buyers are spending good amounts on to gain scale and make Indian operations viable.”
“The consumer durable industry in India comprises two parts namely–consumer electronics and consumer appliances. A recent study by Ernst & Young projects that by 2020 the electronics market will grow at 17 per cent CAGR to reach
2,012 billion while the consumer appliance market will grow at 16 per cent CAGR grossing 1,885 billion in the same time frame,” informs retail opening of the rural market, urbanisation and greater brand awareness, product innovations and variants, easier availability for finance coupled with the ‘Make in India’ initiative are expected to lead the demand surge in the years to come. Manufacturers are also coming up with low cost ‘Make for India’ products keeping in view this vast unexploited market,” he added.
Agreeing with Rathi, Aditya Gupta, Head Business Development–3PL, DIESL, says, “With higher disposable income, improving lifestyles, more working woman and other demographic contributors the demand for consumer durables is growing every year.”
But what are the impediments to this growth? Commenting on the same, Rathi points, “The key impediments the industry is facing are complex tax and duty structure, limited scale and quality from domestic suppliers, increasing competition from Chinese and SE-based manufacturers, capital intensive nature of the business, challenges in setting up and running of business and infrastructure bottlenecks both upstream and downstream.”
According to Gupta the biggest impediment to growth has been high prices. “This could be due to a variety of factors including high and cascading taxation structure, high cost of logistics in India and higher inputs costs. With more of local manufacturing and GST being introduced, we expect better growth for the consumer durable industry in the coming years,” he believes. Poor infrastructure
Sachdeva says, “The basic infrastructure for any industry comprises good roads, power, water, telecommunications, finance, raw materials, components and logistics. In India, these facilities are not up to the mark even in developed industrial estates.”
“The consumer demand is seasonal and high during the festive season. This makes transportation planning difficult. The demand is dependent on good monsoons. Due to poor infrastructure, there is a constant fear of damaging the goods before reaching its destination. Also, since the goods are high priced, the losses are large in case of damages. Underdeveloped distribution networks in both urban and rural areas poses problems and at times increases costs,” notes Rathi.
The industry has been doing well in India. Gupta jotted down the key challenges in transporting consumer durables:
Handling of the material: The units are generally heavy or large in size. Every stage of the supply chain may not have right set of MHE to handle them. Lot of times these units are handled manually which leads to damage and dents.
Volumetric Weight: Gadgets like refrigerator, washing machine and ovens are volumetric in nature, where the volumetric weight exceeds the dead weight. This leads for higher cost of transportation.
Loss of space: Due to large dimensions of the products many a time the vehicle capacity is not being fully utilised both in terms of space or allowable weight.
Damage during transit: During primary transpiration there is always some space available inside the vehicle. If the space is not plugged with air bags or packaging material it leads to damage during the transit with units hitting each other due to road conditions.
Designed packaging should withstand the entire chain, from factory to consumer. The instructions should be printed on the packaging with symbols
“Inverted duty structure due to FTAs makes Indian manufacturing uncompetitive for white goods such as washing machines, refrigerators and air conditioners. Excise duty on consumer durables was rolled back to 12 per cent from 10 per cent,” informs Sachdeva. Packaging is important
“As a LSP, we expect an advance delivery plan, right packaging of goods and least possible detention at the delivery points. Also, as an LSP, we can add value by suggesting the right packaging material,” explains Rathi.
Gupta suggests that the designed packaging should withstand the entire chain from factory to consumer. “The units should be properly strapped and enough packaging material Key demands from service providers. I would suggest having two major points of views: first of all, in the reach of customer there are lot vendors. However, there is very limited access to appropriate vendors who understand your requirement and work exactly towards it. To gain contact for business is essential. Secondly, every company has DNA to operate which works on certain parameters. There customers are spread to mitigate the requirements, fund, support/ credit terms. It’s imperative to say that like customers, vendors also have their defined arena to operate in. Customers have to understand and work towards making exact use of their services. should be used inside the primary packaging. The instructions should be printed on the packaging with symbols regarding the handling of the product. And last but not the least the manufacturer should impart constant training to their warehousing and transportation partners regarding handling of their product,” he adds. According to Sachdeva proper packaging is required because packaging essentially involves protecting the contents from the environment and vice versa. The packaging is thus intended to protect the goods from loss, damage and theft. In addition, packaging must also reliably
I think the mindset of handling customers must change. LSPs are still working with old ways to serve the customers. However, the customers have come a long way. Therefore, it is important to understand the exact needs of the customer even if the vendor is working with the same sort of customers in the same field. Apparently, as all consumer durables aren’t same, they are different from others on scale of price, durability, solutions and features. Same way, vendors have to be open minded to handle the customers and their respective requirements. Any improvements you are experiencing in service delivery over the years?
There are huge changes and constant developments in the last few years, especially in infrastructure, roads, connectivity and support. At the same pace, there are lots of visionary ideas being evolved. However, the milestone is yet to be achieved. Scalable models would surely perform better if transportation and warehousing infrastructure is improved.
I strongly believe in curbing the hub and spoke model and designing the model of direct hit. This would surely bring lot of improvement in the current transportation model and similarly, would appreciate if we have logistics parks in a big way in the coming years. be able to withstand the many different static and dynamic forces to which it is subjected during transport, handling and storage operations. The goods frequently also require protection from climatic conditions such as temperature, humidity, precipitation and solar radiation, which may require ‘inward packaging measures’ in addition to any ‘outward packaging measures’. Promotional material placed on the packaging is intended to attract the potential purchaser’s attention and to have a positive impact upon the purchasing decision.
Promotional material on packaging plays a particularly important role on sales packaging as it is directly addressed to the consumer.