We don't see Flipkart as a threat to partners: Canon

DQ Channels spoke to Gautam Paul, assistant director, CSP Group, Canon India on the Canon's strategy for Inkjet and LaserJet business for 2014

How did Canon-InkJet and LaserJet market-perform in 2013?
Broadly classifying InkJet market, it is where you and I stay; business and home. The consumer printing is of course increasing. Also, the home printing is now affordable and we see growth in this segment too. Overall the InkJet business will grow. Laser still predominantly is in the office space, which is commercial space. Whether it is SOHO, SME or Enterprise these segments still prefers Laser. The home segment prefers InkJet due to the lower running cost.
Also in Laser printing segment, single function hardware is on decline and more multi-functional devices will take over. Even the IDC and Gartner reports say that single function computer will either be stagnant or could see marginal decline and the multifunction's business will expand in India.

So how do you project the year 2014?
Multi-function Laser printers could grow by 30-40% whereas the in single-function one could see growth in the range of 1-3% in terms of market size. Currently, the overall market size for Canon in laser is 1.6mn units. Recently we launched wi-fi enabled inkjet printers. Since its launch we have received some positive feedbacks from the stores and customers are getting inquisitive. In the consumer space there is increasing demand on the value add of the products. Also, currently we are not thinking of enabling the wi-fi feature in laser printers.

So what is the latest offering in the InkJet category?
In this category consumer's demand is based on the per page click cost. It will still dominate the mind size of the customers. We look to expand the E-series category. In about two-three months the market will expect some products from Canon.

How is the channel space evolving with new modes of delivery?
Reaching to the consumer space in this segment is a challenge for traditional channel although the age old traditional channels of Lamington road and Nehru place will remain. But today the consumer's space is shifting towards online buying. It is more into the e-commerce. So Canon will be there in the growing e-commerce space.

Recently some of the companies went public saying Flipkart is not their authorized channel partner. The concerns of the traditional partners are that the online pricing is below the market operating price. What is your take?
This is a wider question in the context of Canon India as a whole but in a broader context I will limit my views as how we see it in the CSP divison. I believe that Amazons and eBays of the world will be there for some time. So these e-commerce companies have two sets of business. One is dot com business and other is the market place. The challenge that every company is facing today is from the market place. Wherever you have the hybrid model-Flipkarts and Snapdeals are hybrid model-they can have an official relationship with the vendor. Procure products and sell, which is through their normal stock and sell method. Other is if you give a platform for an individual or another to register them and offer their products in the offering. For example, today some partners are stuck up with two or five printers and they don't want to get themselves exposed and I have a distressed situation. So some partners register themselves with Flipkart and can violate the MOP. As a measure any consumer with a lucrative offer from any e-commerce site can buy only 2 units of Canon printers from a one IP address.

So what is the way forward?
Our position is very clear; we do not see these channels as our enemy. Flipkart is now a `10000 crore company. Legally I can't stop someone offering my products on Flipkart. The laws of the land don't allow. So I have to be available with these players and have some kind of online partnership program with them. The question is that can I offer a products through a right partner? Like we service the trade we want to service these channels also but through good intermediaries who respects the product and price. Consumer benefits from this as they get genuine materials. Partners benefit as would educate them if they are willing through online channel. We see this as an opportunity. We don't see it this will become a major deterrent.

But the channel partners are dissatisfied by the way vendor companies are treating them. Their business and margins are shrinking. How do you respond?
Possibly partners will be hurt in the changing sentiment. One of the ways they would like to see is that as an organization how are we responding? The first things is to understand what is wrong and then as an organization are we geared up to solve that problem? While they remain our biggest friend, these (online) are our friends which will also evolve. Currently their way of doing business is creating the disruption and we are moving in the direction to reduce the disruption. I urge the traditional channels to not to treat them as enemies right now and don't feel that as an organization, we will only be aligned to them. Our fundamental core business is still you. This is going to stay, this is here.