In what is expected to be a firework of sorts, OLA Electric, the e-scooter company which has set up the world’s largest scooter factory in Tamil Nadu sold around 50,000 scooters in 24 hours since the booking began on Wed. 15 Sep. ‘21. According to a report by Autocar India, India sold 25,598 units of EV scooters in CY 2020. The bookings received by OLA includes those who have paid Rs. 20,000 as booking amount other than the initial teaser booking amount of Rs. 500 which was launched earlier.
While the rage for buying an EV 2W in current times is not surprising, what’s delightful is that the entire sale happened on the internet without customers visiting a physical outlet nor taking a test ride of the vehicle and without even seeing the product. Talks a lot about where Consumer (R)Evolution 3.0 is headed. On the other hand, Bangalore HQ Ather Energy, which was one of the earliest 2W brands in the EV space in India has a physical store in at least 15 cities across the country while Delhi based Hero Electric, part of Hero Motors Group, has an estimated 600+ touch points where one can see / test ride a bike. OLA Electric has swung the pendulum towards its side in what could be a major shift in the Automobile Retailing world.
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All along the years, billions of dollars have been invested by Dealer partners of Auto OEMs to set-up fancy retail outlets across the country. Even Tesla has a number of physical touch points where enthusiasts and potential buyers interact with the product and the sales persons though the cars are said to be 100% tech-driven, including service updates of electronics. The latest ones, from US based Jeep to Korea’s Hyundai all the way up to Maruti’s NEXA showrooms come with the latest comforts to pamper potential shoppers including complimentary coffee, packaged water and so on. Many dealers now offer doorstep test drives, no matter whether the customer is a potential buyer or not in the short term, investing precious time and money in luring future enthusiasts for the brand. In the past 10 years, India has seen a trebling of auto-dealerships across passenger vehicles with a number of first-gen entrepreneurs taking up the opportunity. The Covid-19 pandemic has pub brakes on the expansion but it is said that the sales of automobiles will touch per-pandemic levels within 18 months.
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What OLA has accomplished was preceded by a host of marketing and advertising coupled with famed PR led by none other than the company’s founder Bhavesh Agarwal. The shift from offering “cab services” to building the world’s largest Scooter facility was among the ways the company overcame the pandemic-led stress on the cab hailing business which OLA pioneered in India. The factory, which is spread over 43 acres is as big as Delhi and Mumbai airports put together and is carbon negative all the way with renewable energy driving most operations. The company employs 10,000 women folk in its factory operations along with 3,000 Robots who are involved in almost every aspect of the production process. The giga-factory, as it is proudly proclaimed is spread over 100 acres and has an integrated facility with manufacturing, battery as well as supplier parks ensuring over 90% of parts are localised and in close proximity saving precious time and money in logistics and manpower.
The craze for everything online, especially the OLA Scooters case studies raises suspicion if this could be a new trend in automobile retailing. With the advent of online portals which educate potential customers about the product features, their highlights and drawbacks, 8 out of 10 customers who walk-in to a store are more equipped than the staff, at times reading and studying the vehicle’s features and performance. This brings to question the relevance of large automobile showrooms with crores of money spent on them and employing 100s per dealership. Mercedes Benz India, for Ex., has moved to a CoFo model – Company Owned, Franchisee operated, so that the Capex of the Dealer is bare minimum and their focus is mostly on customer engagement and after sales service. Dealers are loaded with unsold inventory due to the pandemic which is not showing any immediate signs of revival. It would be interesting to see how other Auto OEMs move in this direction. Perhaps, the relevance (or the lack of) Dealerships could be a raging debate in the near future.