Wednesday, October 29, 2014

Sale of Penta mobile; a success or failure - a review

India Post recently started sale of Penta mobile phones through Post Offices.  As a pilot phase this facility was started in selected Post offices in selected Postal circles.  Even though the launch was very successful, the Pantel was failed to supply adequate stock for each Post Offices.  

Now all the Post office selected for the sale of Penta phones are in trouble because they collected advance amount from customers and they have given wide publicity for the sale of mobile phones but they cannot deliver the phone timely and they cannot even answer the questions from customers.

I think decision of India Post for making a tie up with Pantel was in a hurry because the commission rate for sale of each mobile phone was very low.  This is not in accordance with the commission rate prevailing in the market.  India post will get only 10% of the sale amount as commission for sale and after sale service.   Now the online shops are paying 5% to 7% of the sale amount to its affiliate marketers as commission for sale of electronic gadgets.  The commission rate is even more for some other type of consumer goods.  (Affiliate marketing is nothing but placing just one link or ad banner in one website and achieving commission for the purchase effected through this link)  Online stores are giving this much amount only after taking their commission.  The case is very different in direct marketing and affiliations.

Pantel is offering one year replacement warranty and they will execute it through Post Offices.  Replacing the phones, keeping the old phones in safe custody and answering the queries in this regard are purely an after sales service.  But there is no provision for commission for after sales service.  This is very big loss for India Post while comparing the work hours spent for this extra activity.

The same types of Penta mobile phones were available in the online shops few weeks back.  There was slight difference in the model name but specifications and physical appearance was same.  Some shops had sold the same for Rs 1250 to Rs 1350.  The screenshot taken from the website of one online shop is shown above.

Pantel is offering 1999 minutes of BSNL ONLY credit (1800 minutes only in activation time) but only 100 minutes can be used in one month.  So the customer has to use the same BSNL SIM for 18 months to get the full talk time offer.  This is very profitable for BSNL because the customer has to pay additional amount for calling to other phones having non-BSNL SIM and for calling beyond 100 minutes to BSNL phones.

If the call rate for BSNL to BSNL is 25paise/minute the cost of 100 minutes will be Rs. 25 and for 18 months it will be Rs 450.  According to my view the Pantel has to pay around Rs. 500 per phones to BSNL for giving the talk time offer.  Even then the cost will not reach up to the MRP if we consider the sale price as shown in the online stores.

If India Post rethink and increase their commission for the use of their goodwill for the sale of gadgets it will be more worth and attractive.

Let us leave the cost and profit factor and take the opportunity factor.  If we consider the opportunities that have opened before India Post through this sale of Penta phone, it is a big success in all respect. 


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