South Korean multinational electronics company LG Electronics, through its India arm, has set up an online storefront to boost sales in the country during the Covid-19 pandemic. The company-owned online store has been set up using the retail foreign direct investment (FDI) in the automatic route for single-brand companies and manufacturers.
While the online store will focus on premium-end products with 150 models right now, it will eventually sell 60-70% of its portfolio online.
“The entire buying process will be run and controlled by LG and we have tied up with logistic companies for last-mile delivery from our warehouse. Online sales for us have grown by 100% by value in the last one year while it has been 30-35% for the industry,” LG India head Deepak Taneja told Economic Times.
While assuring that the online store would have no exclusive deals or differentiated prices, Taneja added that in due course of time, the company may introduce membership offers which the company has in other markets such as the US.
LG Electronics is India’s second-largest manufacturer of televisions, after its compatriot Samsung, with a 25% market share. However, in smartphones, LG’s market share is minuscule, at 0.5%. The company has two manufacturing units in India, in Greater Noida and in Pune.
The company’s entry in India’s ecommerce sector comes at a time when sales are continually picking up, with customers preferring online shopping amid the Covid-19 pandemic.
Growing Demand In Indian Ecommerce Amid Pandemic
Back in May, when lockdown restrictions across parts of India were first eased and ecommerce deliveries for non-essential items were permitted, many companies saw what they felt was pent-up demand. However, three months on and the demand is still going strong.
As of June, the Indian ecommerce sector had recovered 90% of its pre-lockdown volume according to SaaS e-commerce platform Unicommerce. While the recovery had largely been led by electronic products, the fashion sector had also recovered 70% of its pre-lockdown volume of sales.
Moreover, the demand in India’s ecommerce sector is being chiefly led by electronics and smartphones, with customers looking to buy products which would help them as they work from home or attend school or college classes online.
Amazon India’s Prime Day sales from August 6-7 saw electronics, smartphones and small and large appliances drive up demand, with products worth $600 Mn reportedly being sold during the two-day sale.
According to US-based market research company Forrester Research, the Indian ecommerce sector is expected to grow by 6%, amounting to $35.5 Bn this year.