Peripherals and Accessories

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Pushing Accessories and making Business Sense.

Accessories including charging solutions, cooling solutions, adapters, headsets, mice, batteries, screen guards, surge protection devices, external drives etc are gaining popularity among the channel partners as well as the end customers.

The world over, accessory market is moving on the fast lane, today globally, people spend about $100 on accessories for every laptop purchase they make over the lifetime of the laptop.

In India however, it is a different scenario, as most of the PC accessories have been an afterthought for channel partners simply because channel partners believe that they cannot earn much from these low-value products.

This is the wrong way to look at the accessory picture, because in today’s scenario resellers can end up earning the same profits easily by selling Rs 3,000 worth of accessories as they could by selling a Rs 30,000 laptop.

The Ambit of Accessories

Here in India, accessories business is primary focused on pushing the following products in the market. This includes charging solutions, cooling solutions, adapters, headsets, mice, batteries, screen guards, surge protection devices, external drives, memory cards and USB drives.

India has an attach ratio of about 10 percent for accessories, while globally this ratio would be around 30 percent. Over the product lifetime, people in India spend at least Rs 3,000-4,000 on accessories.

According to Gartner, the notebook market grew at 35 percent in Q4 2009. This increasing penetration of notebooks is propelling even higher growth for the accessories market. The accessories market is worth around $130 million.

Accessories in Large Format Retail

Today we are living in an era where most of the global accessory vendors are making their presence strongly felt with the large format retail segment of IT as well as telecom. So whether it is Bangalore based Sangeetha Mobiles or UniverCell, ITNext or IT store chain Jumbo, accessories constitute a big chunk of their overall focus and offerings for the end user today.

A partner can make at least 15-20 percent margins on accessories, however on the big LFR stores, where one can sell at MRP, the partner can earn even up to 30 percent margin. The PC is the traffic builder. That’s what brings the customer traffic to the channel partner store.

However, if resellers don’t follow a good strategy of surrounding the traffic builder with the margin builder (accessories), you’ll miss the bus. This is something a lot of partners still haven’t got. Therefore, in some cases, a customer buys a PC from a partner and then goes to his neighbor to buy accessories. While the PC seller would have a much fatter topline, the accessories guy might have the same bottomline. The accessories business is thus highly compelling for resellers.
 
Favorable market conditions

Over the last 3-4 years, many new user groups have emerged in the notebook space. While previously laptops were mostly used by professionals, today with the emergence of social networking, you have students, youngsters and even housewives using a big amount of laptops.

With these user groups coming in, there’s a big opportunity for accessories to represent the consumer’s lifestyle. People want to have colorful laptops and laptop bags in order to make a statement, and women like carrying them in a ladies’ bag with a laptop pocket.

Top Trends in Accessories

1)    Acceptance for multi-colored laptop sleeves.
 
2)    The wireless keyboard-mouse combo is also becoming popular, with people wanting to connect their laptops with an HDMI interface to their HD LCD TV to watch movies.
3)    Chill mats are also seeing good acceptance in the market.
4)    New laptops with high-end processors often generate a lot of heat to the extent that you can end up burning your skin if you use a laptop on your lap for more than 3-4 hours.

5)    The chill mat helps you to protect yourself, and also gives you a comfortable elevation to type.

According to industry research, most people go for a USB hub within a month of PC purchase. This is because more and more devices are becoming USB-enabled while you have only a limited number of USB ports on your PC. With the USB hub you can connect multiple USB devices through a single USB port. Hence USB hub as an accessory has surely gained a lot of momentum in India.
 
Moreover, venturing into the business segment of accessories makes more than ever, because today global vendors have realized that accessory market is surely moving faster than expectations. And at a time when the industry is moving at a slow pace, it is segments like the accessory that are likely to make sure that profiting conditions remain with the channel partners.

Another compelling reason for selling accessories is that they have a higher shelf life as compared to PCs. For example, the transition from 160GB HDD to 320GB HDD took about 2-2.5 years, and today 320GB is a standard. Similarly, DVD has been a standard for many years, and even today, Blu-ray is just scrambling to make its presence felt in the market. By contrast, any notebook configuration would be obsolete in just 3-6 months. Also, accessory prices don’t come down as rapidly as PC prices, thus creating some level of price protection for resellers.

As a result, global vendors have rationalized the pricing of their accessories to suit the Indian market. The prices of branded accessories came down by 15-18 percent in 2009. There’s tough competition in the PC and laptop business, so this reduces margins. In comparison, accessories are sold more often, and a large number of customers come in to buy accessories such as screen guards, laptop sleeves and external storage.

Chinese Brands

Chinese brands are everywhere and even in the accessory segment there are a lot of brands that have their base in Chihne.  Today there is no doubt that Chinese brands dominate the accessories market in India with about 60 percent market share in the region.

According to market sources, there are two types of buyers, the one which just wants cheap products, and the one which wants value products. While people looking for cheap stuff continue to buy Chinese products, customers looking for value products don’t mind paying a 30-40 percent premium for a branded accessory.


However, experts do believe owing to better quality assurance and acceptance in the Indian market, branded accessories are gradually overtaking Chinese products. It’s only the first-time buyer who goes in for Chinese accessories and specially in smaller locations it is very difficult for global vendors to establish themselves and hence Chinese brands are active there. The second-time buyer understands the value of branded accessories and is willing to pay a premium for them.
 

Looking for Support

Channel partners strongly feel that accessories already have enough pull, and given some more attention from the global and national vendor side, this market could explode exponentially not only in big cities but also in smaller locations of the country. Experts close to the industry also confirm that most consumers come to buy accessories without knowing which brand to buy, so it is up to us to educate them about the brands. Hence, it should be easier for the vendors to compete against the Chinese or other low-cost brands if they do some educational campaigns to educate the end customers about the perils of going in for cheap products and help the end customer in terms of understanding the advantages of using genuine products and gaining on the long run.

Global vendors also need to develop a different strategy for different markets. B and C class cities with high voltage fluctuations and power cuts have a higher adoption rate for surge protectors and longer battery life UPS, while these things are not much in demand in places like Mumbai and Kolkata where you do not face many power-related issues. Small towns also have a higher adoption rate for Webcams, while lifestyle products like HDMI connectors and chill pads have a higher adoption rate in A class cities.

Hence, in light of today’s favorable scenario for accessories, channel partners have got a big winner in the form of going in for accessories and create better and bigger opportunities for themselves as well as the global accessory providers.