Digital wings for branded merchandise

Big data and online marketplaces help Disney, Viacom18 and Warner double their licensing and merchandise business in India

Fandom is more than reciting the dialogues verbatim of your favourite film, or turning it into a Facebook profile. For many it means owning apparel, accessories, collectibles and anything that helps bind an invisible bond with a movie franchise or a TV show- be it Harry Potter time-turner pendants, a Big Bang Theory 'bazinga' tee-shirt or light sabers from Star Wars. Until recently, consumer product heads at various studios and networks in India found it difficult to monetise the growing passion for branded merchandise in India, their style cramped by the relatively small size of the market and the high cost of retail. However, e-commerce, access to large amounts of consumer data and smart analytics is transforming the licensing and merchandising (L&M) business in the country.

Although the L&M divisions have been active for nearly a decade, visibility and affordability were major deterrents to growth. But in the past two to three years, largely thanks to the e-commerce wave, business has been booming. While there are no concrete figures yet, industry estimates suggest all major licensors like Disney, Viacom18 and Warner Bros. are growing in double digits. As a result, the industry is growing at an estimated 20 per cent per year, compared to overall retail, which is growing at 10-12 per cent.

Going digital has not just opened up affordable distribution channels; it is also helping find new consumers. "The age group of people buying these products originally was 17-27. And it was restricted to men. But recently, even 40-year-olds and women are buying these products," said Rohin Samtaney, co-founder and director, The Souled Store, an online store for branded merchandise. The ticket size, he claims has risen and is now about Rs 700. Souled Store has grown from stocking movie merchandise to that for popular music festivals such as the NH7 weekender, which has been a major boost to its topline.

Saugato Bhowmik, senior vice-president, consumer products, Viacom18 Media, says, "A very significant proportion of L&M business has started coming in from e-commerce channels."

It has especially helped in the case of apparel and lifestyle/accessory categories as these hold a special appeal for the young who make up a big chunk of the online community.

For the networks L&M is not only a rich revenue stream, but also a big promotional tool for movies, sports and music. Most of the IPL teams, for instance, have merchandising agreements with different brands, including newbies like Rising Pune Supergiants.

Disney India, like its global parent which clocked $45billion in character merchandising in 2013, has a significant presence in the L&M market thanks to its wide range of products related to its various properties. Both Viacom18 and Disney have a robust 'Back to School' portfolio which they push aggressively on the digital platform.

Abhishek Maheshwari, VP and head, consumer products, Disney India says, "Back to School is one the biggest categories for us. Physical retail in this case can be highly fragmented and comes with challenges. E-commerce provides the opportunity to display a breadth of products in the desired fashion at one place. It also drives impulse buying through suggestions of related products." Disney has tied up with Amazon for this range of products.

"Indians love character merchandise and there's a huge demand for such products that's increasingly growing online considering the ease with which consumers can now shop," says Mayank Shivam, category leader, Amazon Fashion. Apart from driving sales, e-commerce is also providing licensors like Disney and Viacom18 with precious data about consumer choices. "The power of analytics provides a game changing ability to understand behaviour and thus work on different levers of pricing, promotions, visibility, depending on the insights gleaned. This was hitherto unavailable. The analytics are just starting and should grow in sophistication," adds Bhowmik.

As the licensing and merchandising matures in India, companies are focusing more closely on the business. In the case of Universal Music India, the L&M business is now a part of its growth strategy. Devraj Sanyal, managing director of Universal India explains that with e-commerce, not only has the business become more organised, but allows for targeted marketing. "In India, once you attain price parity with the pirated products, half the battle is won. E-commerce gives us data that makes it possible to identify what to market to whom. It's a good time to expand the scope for the L&M business," he explains.

On the flip side, however, licensed merchandise is a drain on the resources of small online marketplaces. "Yes, they sell like hot cakes. But royalty in some cases is almost 40 per cent of sale price. That is crippling," said the CEO of an e-commerce company, which once stocked mugs and tee-shirts of popular Hollywood films.