Group 2

 Anoop A Thomas 1021205

 Anoop G 1021206
 Apoorv J 1021207
 Arun Suresh 1021208
 re e t
ns G
h i e s d ia
c I n
Ar {Way
Th e
Archies
The Way Indians Greet

{
About the Company
 Archies Limited  (earlier called Archies Greetings and Gifts Ltd.) is
an Indian company based in New Delhi. It was started in 1979 by Anil
Moolchandani.

 Initially it sold song books, posters and leather patches. The company's main
product, greeting cards, was introduced in 1980. Cards were introduced for
major Indian festivals such as Holi, Diwali and Rakhi, apart from the usual
new year, birthday and anniversary occasions.

 Archies Limited is in the business of manufacturing and selling greeting cards

and other social expression products such as gifts and posters. Archies has a
market share of about 50% of India's greeting cards market.

 Archies has about 2000 outlets and franchisees, called Archies Galleries,
spread across 120 cities and 6 countries.
Brief about the case
 Archies developed e-kiosks to bridge the gap between its internet and
retail outlets. This introduced the shoppers to its websites and services.

 The result of this initiative was very good as the website became
popular with 3 million page views per month.

 Although the website archiesonline.com became famous, it did not gain

any monetary benefit because of huge cost of creating and hosting
greeting cards.

 It made archiesonline.com a paid site.20 million investment in online

subsidiary and return was only 2 million from e-commerce. Archies
went into losses.
Cont..
 In June 2001, it ran an advertising campaign across newspapers
and television channels and spent 6% of the revenue on it.

 The idea was to equate e-cards with fun and telling people that
archies cards are the best to express serious emotions.

 In late 2001, the advertisements communicated that physical

cards are more effective than e-greeting and SMSs.So the
online business became an extension to their main physical
card business.

 Archies revamped its distribution network and replaced it with

C&F agents network.It appointed 10 C&F agents in 10 states to
cater to distributors who in turn reach out to retailers.
Cont…
 The biggest advantage of this model is that the company would have
inventory and the customers can see the entire product range it has.

 In 2001, the company started “exclusivity drive” where in the franchisees

were told to keep only archies products and if they did not want then they
could convert it to Archies paper shoppe.

 Archies believed that direct contact with customers would result in better
inventory management and product mix.

 In addition, the company was also planning to increase the number of

vision 2000 stores. These stores were larger than other outlets with world-
class interiors and product range.
There was again decline of profitability because of :

 Increase in working capital requirement to manage inventory and this

resulted in outsourcing of funds and thus interest expense.
 Increase in the real estate investment.

In FY 2001-02, the revenues increased but the profits

declines due to heavy costs. According to analysts the
idea of conversion of distribution network was not
working out.

 Company also faced huge competition from entry of ITC into

greeting card and its entry into business of perfumes and music
brought in more competition with majors like HUL , SAREGAMA
and TIPS.
 Question 1

Critically comment on Archies’ franchising and

distribution strategies for expansion.

Do you think the company’s strategy in the initial

years was right in the light of the rationalization of
exercises ?
About Distribution Network

Revamped its distribution network by replacing existing

distributors by a C& F network.

Advantages
 Company owns the inventory

 Customers have a wide choice

Disadvantages
 Reverse Process

 Increased inventory cost and working capital requirements

Two Rationalization processes

 Exclusivity Drive
⁻ Stores had to stock and display only Archies items.
⁻ Direct contact with the customers.

 VISION 2000 Stores

⁻ World class interiors.
⁻ Stocked all products marketed by the company.
⁻ Increased revenue by 40%.
2.Discuss if Archies will be able to
maintain its marketshare and leadership
in the future with the entry of players
{
such as ITC? Will the company’s
current strategies help sustain its
competitive position?
 Increase in Revenue by 18%.
 Product diversification.
 Company owned and Franchise base retail stores.
 Direct reach to customers
 E-market as a subsidiary business.
 Increase in number of stores through a drive Vision
2000.
Conclusion

 Poor planning ( failure of e-kiosks)

 Even though the number of e-greetings sent reached 54
million, the company had no monetary benefit
 As a result company made archiesonline.com a paid site
as it couldn’t afford the losses of Rs.13.5 million
 The company spend 6 % of its turnover in campaigning
to imbibe the feeling among public that archies cards
was the best way to express emotions.
 In 2001 Archies ran huge advertisement stating that
physical greeting card is more effective than sms or e-
greetings
 In 2001 archies ran an “exclusitivity drive” in which all franchise
were asked to keep only archies products
 In the financial year 2000-2001 the company’s revenues were
Rs.804 million, an increase of 18% but the net profit declined to
Rs.75.3 million.
 Eventually the entry of ITC into greeting card business was not a
good news either