ARCHIESTHE WAY INDIANS GREET

Submitted to :Prof. Rajeev Kumar

Submitted by:Ruchi 09BS0001965Swati Anand 09BS000

INTRODUCTION

• Archies was the brainchild of Delhi-based Anil Moolchandani.• Started by buying and selling quality posters.• Visited South East Asia and got inspired by the way gift and cards shop

operated there.• Incorporated the concept in Delhi at Kamla Nagar in 1987.• It was an immediate success among the teenagers.• Anil along with his brother established Archies Greetings &Gifts Pvt. Ltd.• In 1995, they came up with IPO which was 4.5 times oversubscribed.

Archies different business• GREETING CARDS • Contributes 69% of business with 15% growth.• Strategic tie ups with : American Greeting Corporation, Gibson Greeting,

Portal Publication, Kingsley of UK and Kel Geddes of New Zealand.• Cads are also sold under Help Age Brand.• 1st to start cads in Indian regional language.

• GIFT ITEMS• Became operational in 1994 and accounts for 15% of business, growing at

30%.• This includes photo albums, frames, stuff toys, clocks sunglasses,

perfumes and deodorants etc.

CONTD…

• STATIONARY PRODUCT• Contributed 16% to the revenues.• All the products manufactured in-house.• Products comprised of autographed books, diary, calendar, posters etc.• Growth rate is 10 – 15%.

REASONS FOR NOT SUSTAINING THE PROFITABLITY IN 2000-01.

• The major threat was posed by the e-greetings.• This was overlooked but the management and this caused a

visible dent in their revenues.• This compelled the brothers to launch their own website.

• Also other players like ITC were competitors who ventured into cards business.

ARCHIES’ FRANCHISING AND DISTRIBUTION STRATEGY.

• ARCHIES’ adopted franchising model of business in the beginning. • It was successful. But the company was not able to push the sales of all its

products.• So the company shifted to carry and forward agents who were appointed

by the company.• The franchising strategy for archies was good but then shifting to C&F

agents made archies to spend more as these agents had distributers again under them.

• At present Archies is having more than 1500 stores all over India and outside India.

E- GREETINGS THREATArchiesonline.com had 3 major sections- meet , greet and gift.

MEET: Free email, chat, reminder services, greetings scheduler.

GREET: Consumer interaction area where registered customers could send and receive animated e-cards /greetings online for free.

GIFT: Consumers could purchase gifts and get them delivered at their doorstep. Min value of each purchase was Rs 250 and Rs25 as delivery charges.

Archies tied up with courier companies- Blue Dart and Elbee.

Tied up with Easy Net Com for the payment gateway.

Strategic alliances with various portals- yahoo.com, Jaldi.com, Indiagreetings.com

E-kiosks introduced shoppers to the company’s website and its services.

Novel concepts like e-crackers that enabled surfers to burst ‘pollution free’ crackers.

Even though the number of e-greetings sent through the site touched 54 million , Archies discovered that the company gained no monetary benefit.

They invested Rs 20 million in the online subsidiary but made just Rs 2 million from e- commerce as creating and hosting one card cost them around Rs. 6000.

Hence, Archies decided to make Archiesonline.com a paid site.

THE DISTRIBUTION REVAMPReplace existing distributors by a C&F agent network.

Acc to the new distribution system, in place of 68 distributors in 21 states, Archies Appointed 10 C&F agents in 10 states who catered to distributors who in turn reached out to the retailers.

Advantages: Archies could push its entire range of products into the retail channel.

C&F agents cut costs significantly while the distributor margin was 25-30%, the C&F Margin was only 12%.

Disadvantages:

Bottlenecks in some parts of the country.

RETAIL REVAMPARCHIES FRANCHISEES: GALLERY EXCLUSIVE OUTLETARCHIES PAPER ROSE SHOPPE: NON EXCLUSIVE BASIS.

VISION 2000 STORES: Bigger than any other Archies retail outlets.Brought 40% more revenues.World class interiors.They were Moolchandanis’ view of an ‘ideal Archies outlet’ .

WHERE RATIONALIZATION GONE WRONG?Decline in profitability: During the conversion stage from distributors to C&F agent set up the company took back all the stock lying with the distributors. This increased the level of Inventory, which increased the working capital requirement. This forced the company to outsource fund requirements and therefore incur a heavy interest burden.

In addition, Archies had to pay higher interest on working capital and had to write off expenses incurred on an ERP initiative also contributed to the decline in performance.

Though Archies planned to take retail space on lease, it had to invest heavily in real state.

THREAT FROM COMPETITION:

ITC entry into the greeting cards business

The company’s entry into the highly competitive music and perfumes business put Archies in direct competition with giants such as Saregama and Tips Cassettes in the music segment and with HUL and Cavin Kare in perfumes segments .

THE FUTURE- SHIFTING FOCUS:As gifts segment is under- exploited the idea is to make Archies Gallery a ‘one stop Gift shop’ for people from walks of life.

Importing high-end gifts like crystal, soft toys, Feng Shui items is the latest trend.

Outsourcing certain gift articles such as posters, mugs and key chains which it had Manufactured till now.

Competitive based pricing.

VISION: 100 VISION 2000 STORES which will contribute at least 40% to sales and the Balance 20% will come from distributors .