The famed Lamington Road is widely accepted as the IT hub of Bombay. Considered a Mecca for hardware enthusiasts, its main USP has been its rock-bottom prices driven by large volumes. I have seen it evolve over the past two decades, but time hasn't been kind to it. This hardware haven was once a place where the shopkeepers knew their hardware and wouldn't mind giving out sound advice to customers.
However, finding high quality products, enthusiast gear, and more importantly, good customer service has become increasingly difficult at Lamington Road. The shops now peddle cheap products that sell in large volumes, while the ones behind the counter don't quite care or know much about their wares. The high-end hardware market has gradually moved onto online shops, but one can still find a few brick-and-mortar shops that do cater to this niche.
What follows is a freewheeling interview with Rahul Varma, the proprietor of one such establishment - E-Lounge, which started out as an e-shop catering to the hardware enthusiast market. Mr. Varma took up the online hardware retailing business to fill the void in the enthusiast segment that formed after Lamington Road started to lose its edge. Let's find out what caused this exodus of enthusiasts from the physical shops to the online ones, straight from the horse's mouth.
Tell us about yourself and E-Lounge.
My name is Rahul Varma. I started theitwares.com four years back in 2007. Initially, I was the sole person working for it. It was a one-page website with a list of products available in the market and their prices. People like the idea of checking prices online from the comfort of their homes and it really caught on. We later shifted to an HTML based website adding additional functionalities that allowed visitors to interact with us by email from the website itself and such. Now itwares.com has evolved into a larger website, where you can view product pictures, specifications, get product updates, and buy products from the site itself.
How did you get into this business?
Around five years back, I wanted to sell my old PC. One of my friends suggested a forum called TechEnclave. He assured that I would get buyers over there. I did what he suggested, and the response was pretty good. At that point of time, I was already considering getting a job or starting a business of my own. Since the same friend had contacts in Lamington Road, I used them to get products at good rates.
Basically, you can say that TechEnclave also has a good part in this. Without these forums, I don't think my site would have received such exposure. At that point of time there was only one such shop - PrimeABGB, which did not have a website at that time either. No one would put up any prices online; with the sole exception of a Chennai-based website called The IT Depot. Even their prices weren't up-to-date. That's when I hit upon an idea to provide home deliveries to customers. The idea was to put up prices online, be transparent, and give good products to customers. That's how it all started.
Where do you get the most business from - the brick-and-mortar shop, forums, or the website?
The website is the most important for me, because that is our face to the world. Even though we receive customers in the brick and mortar store, they know us due to the website. The website, therefore, is the best way to generate orders - be it online or offline customers. Most of our walk-in customers are connected to us online through the website or the forums. They have seen us online that's why they visit us offline.
Your shop was located deep inside the bylanes of Lamington Road, with customers solely coming through word-of-mouth. However, you have recently moved onto the front street. Have you gone mainstream?
Mainstream, as in?
Like going from an enthusiast-hardware-only shop to the one that stocks run-of-the-mill goods too. Does that mean you'll now compete with these front street shops, or will you continue to remain niche?
I'll still be niche. I prefer selling good quality products to my customers. We try our best to give honest, genuine prices to our customers. As our prices are available online transparently, it doesn't matter if a tech enthusiast or a layman in his 50s enquires about a product. Both of them will get the same price that's mentioned on the website. We would rather have a long term relationship with our customers than, you know, hustle one deal and forget about them.
Do you allude to the front street shops by that? What's your take on them?
The number of shops are increasing by the day. Initially, I think, there were no more than 50 shops. Then the numbers rose to 100, 150, and then 250. Right now, there are around 400-500 in Lamington Road and its bylanes. The competition has grown a lot, which means lower margins in these IT products. I believe that's the reason behind the decline in the quality of customer service extended by these shops.
Do such low margins also explain their impatience towards low volume, walk-in customers?
Yes. If they are to earn only Rs 25-50 from such customers, the amount of time and dedication that they extend will also be reduced.
How important are forums for online retailers?
Very. With forums we can directly connect to our customers, who already are tech enthusiasts. Most of our customers originate from the forums or come through recommendations from the same.
Do you extend any special offers to forum members?
Yes, sometimes we do, like recently we had 10% off on certain products.
Considering this niche market is built upon forums and online presence, how important is it to have a brick-and-mortar shop as opposed to an e-shop?
In India, yes, it is important because a lot of people still prefer to have a look at the product, feel it, touch it and then go for it, instead of just looking at the picture and buying it online. The scenario, however, is changing and more people are buying stuff online. Online market is growing and getting secure too. Products are now insured against theft, loss, and damage. If the wrong product is shipped, whatever happens, it is the dealer's responsibility.
Let me rephrase that. Things such as processor and smartphones have intangible qualities that only become apparent once you have purchased and set them up. So people usually visit websites such as TechTree, read reviews, and analyse benchmark figures to decide upon a product. They have already made a decision before they even reach the shop. So for people like these, do brick and mortar shops really matter?
If the person is a tech enthusiast and he's well aware of the reviews and technicalities, I believe a brick and mortar shop isn't important for such people. The one good thing about our business is that there is no grey market stuff. Or rather there are no Chinese knockoffs. You will never see a fake processor. Therefore, almost all enthusiast products in the market are genuine.
How much of a say do distributors have on the prices?
Sometimes yes, sometimes no. If a certain product has a high volume, the distributors give good pricing. You can see that with processors, mobos, and HDDs. If you compare the Indian and US prices of these components, you'll find them to be similar. However, if you compare graphics cards, or other elite products, their prices will be slightly higher. That's because the volumes of such products are on the lower side, so the distributor has to hold the stock longer. That means his money is stuck for a longer time. This leads to the distributors charging higher margins, which drive the prices upwards.
In case of a distributor monopoly, do they ever arm-twist you into selling goods at higher prices?
I wouldn't call that arm-twisting, but they do charge a premium. Since they are the only ones there, there's nothing pretty much a dealer or a customer can do about it.
There are only two shops catering to the hardware enthusiasts in Bombay? Is the market that small?
The enthusiast market, if you compare it with the rest, it is definitely much smaller. Take the example of these front street shops, even their customers don't care about what's under the hood. If you visit these shops, you'll see buyers selecting cabinets based on their looks alone. They aren't even bothered about the fact that the cheap PSUs these cabinets come with will most likely kill their hardware. The majority is more concerned about looks and price than about quality, and hence the enthusiast market is still a niche segment.
Yes that stuff is mostly cheap and horrible, but most customers can't really tell that. Does that discourage you?
I think this is a growing market. When I started this business online, there were only one or maybe two other websites. Now there are well over 20. More and more people are warming up to the idea of shopping through online shops like ours. People want to buy good things and they have a taste for quality products. Therefore, I think over the next few years, the Indian online scenario will be much better. There will be a lot more people reading reviews, googling stuff, and becoming more aware about the right products to buy.
Earlier expensive hardware would force enthusiasts to get their NRI relatives to bring down expensive hardware. However, with the increasing parity between the Indian and International prices, have you seen a commensurate rise in demand for such products?
Yes, the affordability of such hardware has caused a boom in the online market. People are now more aware of better brands. Even dealers pay heed to what people want now, and they provide the same. Earlier, I think they used to underestimate the online market, but that isn't the case anymore because more people prefer buying good quality stuff now.
A lot of shops from Chandigarh and Delhi have been able to price products more competitively, as compared to the Bombay based dealers. How do you compete with that?
I think that is unfair because the taxes are lower over there. The Government should maintain the same taxation throughout India.
Especially considering the lack of regional barriers for online shops.
Correct. Just because Bombay is the financial hub doesn't mean that the Government should take more from us.
I guess there's no competing with that then. What's your take on the individual sellers on the forums? Take KMD for example?
I think they are parallel importers, who want to do a small time business and run away. In fact, KMD did run away. He has been inactive for a long time now. As far as I can tell from the forum chatter, many of his customers were enquiring about him; some were even concerned about their money as well. I think nobody knows his address or his phone number. He did honour most of the deals, but some of them weren't honoured. The business model of these parallel importers itself is a very short term. After some time, customers realise that it is a pain to reach them for warranty.
Now that you serve all of India, where is the most active tech enthusiast scene located? From where do you get most of your orders?
Orders originate mostly from the metros, but the most active scene has to be Bombay. However, there are also a lot of orders from far-flung towns, where they see no availability of such high-end products.
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