Merlin aiming to weave some retail magic
Merlin Digital sales manager Rohit Bachani outlines the consumer product vendor's growth plans and puts up a defence against suggestions its web shop will create conflict with the channel
Merlin uses sister company Softmagic as its master distributor for the UAE. How are you addressing other markets throughout the region?
We are currently searching for sub-distributors in the Middle East, especially Saudi Arabia and Egypt. We have already appointed a distributor in Kuwait, but we are also looking at some of the other smaller GCC states now. We do have a presence in those countries already, but we have done it though direct distribution.
What would be the advantage of using sub-distributors?
It would mainly be faster logistics and stocking because retailers do not like to stock. They need weekly replenishments and it is better for somebody to at least break the bulk for us. A traditional distributor can also help with the marketing and things like that.
As well as identifying sub-distributors, what are your other priorities this year?
Everybody knows it is going to be a tough year so we are just trying to consolidate, strengthen our partnerships with existing clients and partners, and support them. Although we see consolidation, it does not mean people are not going to get new products. That's our forefront, that's how we survive - by being ahead of the market.
So how many retailers do you sell to in the UAE at the moment?
Key retailers currently include Dubai Duty Free, Plug-Ins and CompuMe-i2. We also deal with hypermarkets such as LuLu and we are actually looking at entering Carrefour this year too.
Are you finding that the expectations and demands of retailers are changing because of the deterioration in market conditions?
Yes, obviously when you have fewer clients and less volumes and the bottom line of retailers is affected then they will look back to the suppliers and have a few more demands. We understand that and we are working towards it. Retailers are our lifeline and we have to work with them and see what their demands are.
Merlin has a website where customers can purchase directly. That is quite unusual for a vendor.
Yes, we have a direct e-commerce enabled website which allows the end-users to see our products. Every product has a video showing the customer how to use it and they can buy direct. We do free shipping in the UAE and we also ship all around the world. Very few companies do e-commerce or accept payments online and in the Middle East some people are still wary of using credit cards online, but that is changing. We have started an e-commerce website and I believe many distributors and vendors might follow this step.
How much business are you doing through the website?
Well it's quite new, it is small, but I see huge growth. I see triple-digit growth in the coming years as it is growing month-on-month. It is a very small fraction at the moment, but I do believe it is the future.
Doesn't the e-commerce website create conflict with the retail channel that you sell through?
No, it actually increases traffic to the retailers because, as I said, many people are wary of using their credit cards online. Our prices either match the retail prices or are slightly higher. They are not below the retailers' prices so the website is a very good tool for the customer to see what the product looks like before going into a store and collecting it in a traditional manner. Our website also carries all the retailers' names and locations.
If you look at other markets - particularly in Europe where Apple has gone head-to-head with the channel by opening its own stores - vendors which sell directly risk creating conflict with partners. How are you going to prevent this scenario from happening?
That happens when the pricing is lower than the retailers' and we will never let that happen. Retailers are our most important asset and we won't do anything to upset them.
What kind of financial support does Merlin provide to retailers?
Most of the retailers we work with enjoy the standard credit terms with us, which ranges from 30 to 45 days. Also, we offer most of our retail partners well-trained merchandisers. We have a very strong training team and we deploy merchandisers in most of the stores. Along with that, we give them a lot of marketing and product support, as well as live demonstration stands and point of display and point of purchase materials that really attract traffic into the store.