BEING a distributor is more than just shipping a brand’s products to markets – it is about developing markets for a brand, said Kailash Gupta, managing director of Generation Next Communications (GNext).
Specialising in consumer electronics, GNext distributes products from major brands such as Dyson, Apple and Xiaomi to retailers in emerging markets where the brands themselves are not present. These include countries such as Bangladesh, Mongolia, Myanmar and Azerbaijan.
Distribution is often seen as a “financing game”, said Gupta, requiring enough capital to purchase and ship as many products as possible. But he believes that finances are just one facet of the distribution business, with value-added services and sales channel-building being key instead.
In approaching a market, GNext examines its potential and which retailers are selling what kinds of products. The company then finds partners in the market, and works with them to present a case to the brand principals for their approval.
The company also helps its partner retailers look at what is really selling in their market, with the aim of supporting their sales.
Some distributors might care only about getting products to retailers, said Gupta. “But we look at how to help the retailers sell their products.”
A NEWSLETTER FOR YOU
SGSME
Get updates on Singapore's SME community, along with profiles, news and tips.
GNext also tracks how quickly products get sold in each market, and predicts inventory based on trends.
A local presence
The company focuses on both quantitative sales – attaining high sales volumes for its products – and qualitative sales, which involve building the market.
The key to qualitative sales is to not just have a transaction-based relationship with retailers in the market, said Gupta. “Our style of working is to set up a local presence... it is more about developing the market.”
Whether through social media, digital marketing or out-of-home (OOH) advertising, GNext works to create awareness of a brand and generate market demand.
The company also runs a central website where its partner retailers can post their offers and promotions. This is geo-tagged to each market – meaning that a customer accessing the site from Myanmar, for example, will see only local information.
But in the markets where GNext operates, English is not the main spoken language. That is one reason the company hires local teams, bridging the gap between headquarters and the individual markets.
Another issue is that most brands produce promotional materials only in English. The company thus has a digital “creative hub” to help its partner retailers across the various markets develop their own materials.
The creative hub provides official brand images from which the retailers can choose, and add to them their own logos or text. The resulting image is then ready to be published, whether online, in print or as an OOH ad.
“This is the reason we are able to provide a complete solution to our principals,” said Gupta. Part of being a distributor, he added, is ensuring that retailers stick to the brand principals’ rules on branding and display.
Having a local presence has helped with that, with GNext’s local teams visiting retailers often and taking photos to ensure compliance.
Adding value, going further
Besides the usual distribution business, GNext is looking at programmes to add value for its partners. For instance, the company handles after-sales services, such as repairs, using genuine spare parts.
Another value-added service it has developed is an extended warranty, where it finds local partners to extend a product’s warranty beyond the standard one year offered by all brand principals.
As a single entity – instead of several different service providers – GNext can more easily deal with insurance companies to offer an extended warranty service across its various markets.
Then, there is the finance side of the business. The emerging markets where GNext operates often have higher interest rates than Singapore.
To take advantage of this difference, GNext borrows at Singapore interest rates and extends credit to its overseas retailers. This lowers expenses for the retailers, which in turn allows them to offer products to consumers at lower cost points.
GNext has also worked with its smaller retailers to offer easy instalment plans for customers purchasing their products, as such mom-and-pop stores might not have the scale to provide these plans on their own.
The company’s next focus is automation, with plans to bring in a tracking system for its warehouses. With this system, products will be scanned and weighed to ensure nothing is amiss, then assigned a spot in the warehouse.
This system can provide exact product locations to pickers, who retrieve products from the warehouse to ship to retailers, making their job easier. The system will also track when retailers sign for the delivery of the product.
Geographically, GNext will be growing its new markets of Pakistan, Kazakhstan and Azerbaijan. The company will also widen its portfolio to include products such as speakers.
As for its services, GNext intends to expand its “trade-in” initiative, where consumers can sell used devices back to the company’s retail partners.
GNext has a grading system that determines whether the traded-in product can be resold to a secondary market, or should be disposed of in an appropriate manner.
“We are trying to be part of a sustainability movement, because we see a lot of products that people buy either stay in their closets, or are disposed of in the wrong way,” said Gupta.
GNext began the initiative in Sri Lanka in September, and will use the knowledge gained there to roll the programme out to other markets.
Keyword added to your list