Archies in talks with Amazon, AOL

Sabil Francis

agencyfaqs!

NEW DELHI, November 3

When hammering out strategy, company officials at Archiesonline.com do not look beyond three months. That is how fast the Net changes. And as company officials at the parent company, Archies Greetings and Gifts Ltd. (AGGL) huddle together to chalk out a market strategy that could enable them to achieve their turnover target of Rs 1 billion by the fiscal 2002-03, the world of e-commerce avidly beckons.

It's a world that could be the gateway to profits in the business of offline greeting cards as well.

Archies Online, which was set up in May 2000, is now exploring tie-ups with national and international portals. Industry sources, who are avidly watching the growth of Archies Online, say that the greeting card portal is now talking to players like Wipro, Amazon and AOL, to see whether it could tie up with them in content alliances. Content will be in the form of online greeting cards. Company officials, however, refused to comment.

agencyfaqs! understands that Archies plans to provide cards to other portals and charge a royalty. If the site provides a hyperlink to Archies, the site will get a commission of 20 per cent from Archies. Other revenue models that are under consideration are membership charges for those who come to the portal. They would be charged at a fixed rate per card.

Archies has already tied up with Yahoo! India to e-tail the company's cards and gift articles. It has tied up with digitalht.com for e-greetings, and with Mantra Online and Uthplanet.com to provide content. Such alliances would net the company a licensing fee of around $15,000 to$ 25,000 per year.

But the real target is the big boom in the greeting cards business once e-commerce takes off. Market research has shown that people prefer real cards to virtual cards. And Archies hopes that if they come to Archies Online, then it will be one small step from e-cards to real cards, ordered on the Net, delivered by AGGL.

The bedrock of this strategy is the strong on-the-ground retail presence that AGGL enjoys. Its extensive brick and mortar presence enables it to deliver cards quickly and efficiently, and, as a manufacturer, it does not have to invest in other retail sellers.

The Archies Galleries, Archies Card shops and Archies Paper Rose shoppes together add up to nearly 400 plus outlets, spread over 120 cities, across six countries. With a network of 15 franchisees located in Bangladesh, Nepal, Bhutan, Sri Lanka, Muscat and Abu Dhabi, the company presents its rivals - both online and offline - with a big challenge.

Decentralised locations and fast delivery is what the company is pinning its hopes on. And then an assiduous wooing of NRIs, with advertising in India West, and India Abroad, New York-based newspapers that have a large readership of NRIs.

The company is offering Indians abroad the option of sending real cards back home, by just ordering online. Thus, someone in New York can get an Archies card delivered to his friend in Pune the next day. All without the dull routine of buying the card, going to the post office, stamping the envelope, and putting it in the box.

Simultaneously, the company has put in place a well-thought-out expansion plan. It hopes to have a chain of 100 company-owned stores, called Vision 2000, in five years. Each Vision 2000 store will have at least 1,000 sq. feet, and will sell only exclusive Archies products. Eight Vision 2000 stores have already been opened in Mumbai and Delhi.

The export market will be expanded to South Africa, Philippines and UK, where the usage of cards during festivals will be promoted among the Indian Diaspora. This is where the company's tie-ups with international horizontal portals will come in handy.

Innovation and Archies go a long way back. It all began when, in 1979, the chairman cum managing director, Anil Moolchandani and his brother Jagdish, decided to start selling greeting cards and posters through mail order. Things went well, though, right now, things are not really looking up. For the second quarter, the company's sales and pre-tax profit declined by 6 per cent over the corresponding quarter of 1999 to Rs 18 crore and Rs 5 crore respectively.

That's exactly where the new strategy comes in. After all, at AGGL, tying up is a market strategy that has been honed to a fine art. Exclusive tie-ups with US-based greeting card companies, such as with the US-based Gibson and American Greetings Inc and Portal Publications, played a major role in the growth of AGGL.

Only time will tell whether the same will come true for its online operations.

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