Quick Reads
- Plan the amount of money that needs to be invested wisely in shop maintenance, security deposit, and working capital.
- Focus on the turnover of your stock such as affordable and mid-range smartphones, and accessories with great margins.
- Develop a network of trusted vendors from local mobile dealers who can provide you with the best stock and even extend you credit facilities.
- Earn more money from the customers by giving repair and warranty services apart from your mobile accessories.
Introduction
While walking in any big market street of India, you are bound to come across three or four mobile phone shops in a span of less than one hundred meters. Despite that, new stores are opening up every month. The demand for smartphones, accessories, and repair services never ends. However, the competition is equally intimidating. Newcomers in the industry open their shops with just enough money to pay the rent and buy some initial stock.
After a few months, their phones remain unsold, the rent bill accumulates, and the customers keep pestering for the devices that the shop does not possess anymore. That is why a business plan for a mobile store is crucial. It keeps your money flowing steadily and ensures survival in the electronic retail market.
Understand the Indian Mobile Retail Market
The Indian mobile retail market is highly competitive, but the customers’ demands differ from locality to locality. Therefore, a thorough understanding of your target audience is necessary even before you pick up the phone to call your landlord and pay the security deposit for your shop.
For instance, if you are opening a shop in an area with a high population of students, your primary focus should be on mid-range smartphones and accessories. Whereas the working masses would be more inclined to buy smartphones with good exchange value and attractive EMI options. Understanding your audience is of paramount importance because it saves you from investing in expensive flagship models that nobody is willing to buy.
Choose the Perfect Location and Layout
Your shop location plays a crucial role in determining its success. The location needs to be picked after analyzing the inflow of potential customers. Try to find a place with a healthy flow of people without compromising on the rent. The shop needs to have an eye-catching frontage facing the road. The layout should be planned in such a manner that customers can easily fetch the mobile accessories while keeping the high-end smartphones in the showcase.
Stocks, Margins, and Turnover
Smartphones attract customers, but the accessories are what fill the money pouch of the retailer. The margins on the phones are usually tight, ranging from 3 to 8%. However, the profit margins on accessories range from 30 to 60%. A proper balance needs to be maintained between the two while keeping in mind their demand and popularity. Some of the best sellers in the organized mobile retail sector are:
- Entry and mid-range smartphones with high brand value
- Fast-moving accessories
- Mobile phone repair services
The turnover of the stock should be maintained in such a way that there is no old model lying in the showcase waiting to be sold. A regular stock audit is mandatory to avoid the unnecessary tying up of funds in old and damaged phones. It is better to keep a small stock of smartphones and high-end accessories and keep on replenishing the supply according to the demand in your locality.
Estimate the Working Capital and Startup Expenses
Starting a mobile retail business will require you to have a clear picture of the money that needs to be invested in it. Ideally, your initial expenses would comprise a security deposit, shop setup costs, and working capital. The former includes the amount paid to the landlord as rent. As for the latter, it keeps your phone showroom running and ensures that the bills for electricity, salaries, and other expenses are paid regularly.
The amount of working capital depends on your targeted sales for the month. Your targeted sales in a month would be:
Expected sales per month = Number of units sold × Average selling price
Keep in mind the fact that the amount that you get from your targeted sales is not your profit. For instance, your business might fetch you ₹4,50,000 by selling 30 units of smartphones at an average selling price (ASP) of ₹15,000 per unit. However, the profit margin on these units might be as low as 4 to 5%. That is why it is important to have enough working capital handy to keep your doors open. Otherwise, the bills for your shop rent and electricity will keep piling up until your shop starts earning.
Develop Networks With Distributors and Suppliers
Develop your network of trustworthy local mobile phone dealers and brand agents. They would be your prime source of stock. Moreover, you might also get exclusive marketing material and discounts on bulk sales from your reliable suppliers. Ask them about the returns policy, credit limit, and supply time in case any of your regular-selling smartphones get out of stock. It is always better to have an alternative supplier so that you never run out of your most-sold mobile phone model.
Marketing and Sales Strategy
The best way to advertise your mobile retail shop is to invest in local marketing and branding strategies. People in your locality are always on the lookout for a credible mobile store with attractive offers. You can hang informative pamphlets containing your contact information and special offers in your neighbourhood and nearby bus stands.
The modern marketing approach requires you to have your mobile store listed on local search engines. That way, customers searching for the nearest mobile shop can easily contact you and even check your timing and location.
You can also tie up with some consumer finance companies to give your customers an option to buy smartphones on no-cost EMIs. The credit purchase mode is the preferred choice of Indians buying mid-range and high-end smartphones. Therefore, they would rather take a loan on a monthly payment basis to own a smartphone rather than paying the hefty amount in one go.
Funding Your Indian Mobile Store Business
Once you have calculated your startup expenses and the initial working capital, it is time to think about the possible funding sources. Your funding options might include using your own money and taking a business loan from a financial institution. A proper business plan for a mobile store always gives you an advantage when asking for a business loan.
Mentioning your cash flow estimates and strategic inventory management will assure the loan company that you are a credible borrower. Furthermore, if you need instant funding for your mobile retail business, you can apply for digital business loans from companies offering collateral-free business loans to meet the working capital needs of your business.
Avoid These Mistakes While Running a Mobile Phone Showroom
Below are a few things that can be avoided while running your business:
- Do not maintain a huge stock of smartphones. It will only lead to losses, as some of the models might fly off the shelf while others might get outdated.
- Do not ignore your after-sales services. One-time customers can transform into your regular customers with your honest and reliable after-sales support.
- Keep your personal expenses and shop expenses separate to maintain a clear picture of your profits and losses.
Conclusion
Opening a mobile store is not an easy task, but with a systematic approach and thorough planning, it is surely manageable. Maintaining a business plan for a mobile store will help you keep track of your expenses, ensure a healthy flow of customers, and assist in maintaining a reasonable profit margin.
Frequently Asked Questions
1. How much does it cost to open a mobile store?
The investment required to open a mobile store varies depending on the size of your shop. Whereas a small shop costs around ₹5 lakhs, a medium-sized shop might cost up to ₹15 lakhs.
2. Is it a profitable business to open a mobile shop?
Yes, a mobile shop can be a highly profitable venture if you know how to maintain the right balance between smartphones, accessories, and repair services. Although the margins on smartphones are tight, the after-sales services and accessories offer a healthy profit margin.
3 .What licenses do I need to open a mobile store?
You will be required to submit your application for Shop and Establishment registration and acquire GST registration. However, you might also need to apply for some trade licenses issued by your local administration.
4. How to make a mobile store profitable in the era of e-commerce?
Try to stay ahead of your competition by providing a wide variety of smartphones and accessories with assured warranty claims and free repair services within a certain period. Give your customers an option to pay their bills in easy instalments. Moreover, try to offer them exclusive discounts on exchange value that e-commerce sites cannot provide.
