Reliance Webstore Limited, the wholly-owned arm of Reliance Communications and the retail venture of Reliance ADA Group running a countrywide chain of Reliance World stores, has entered into the handset retailing business.

The company has broadened into handset distribution business besides its present focus of handset retailing via Reliance World and Reliance Mobile stores. As part of this strategical move, Reliance Webstore has set up a new arm to focus and expand its mobile distribution business. Incidentally, this is the first time a retail chain is entering in the distribution business.

Reliance Webstore will follow the 'Hub-and-Spoke' business model to run its handset distribution operations. This is the first time in the country that the 'Hub-and-Spoke' idea is being deployed by a retail chain to allocate products. This exclusive business model will leverage Reliance World stores to serve as distribution hubs.

Each store will be accountable for recording its own channel associates and handset retailers and build up its own mini-distribution network. As part of its entry in the handset distribution business, the company has already joined hands with over 1200 handset retailers and Multi-Brand Outlets (MBOs) in nearly 100 towns.

While commenting on the development, Mr. Sarup Chowdhary, Director & CEO, Reliance Webstore Limited said, "We continually identify new growth opportunities by leveraging our Group's synergies across multiple sectors and competitive advantage of Reliance Webstore's overall retail network. Our 'Hub-and-Spoke' model for handset distribution is unique to India and will result in remarkable convenience and efficiencies in the distribution chain. In addition to our exclusive distribution agreement with Coolpad Communications, we have also identified other new business opportunities to leverage this model for a larger participation in the Indian telecom retail sector."

Reliance Webstore's distribution model is planned to make sure that every registered retailer (spoke) is within 15-30 minutes' distance of a Reliance World store. The Reliance World store
(Hub) will function as a stocking and transaction point for such retailers, providing extraordinary convenience and efficiencies in meeting market response as well as needs.

The model is also designed to slash the flab of customary distribution models, resulting in attractive price-points for the end-consumers. In this way, Reliance Webstore's sole business model provides a win-win proposition for all - the manufacturer, the company, the retailer and the customer.

By 2012, Reliance Webstore is aiming a distribution network of more than 10,000 multi-brand outlets (MBO) and retailers spread across 700 Indian towns.

This "Hub and Spoke" business model is likely to speed up Reliance Webstore's growth route of its already lucrative telecom retail business. Besides retailing handsets, airtime, accessories and providing customer service for RCom, the company's chain of Reliance World stores will now distribute handsets to other retailers.

Reliance Webstore's handset distribution business foray immediately follows the company's strategic agreement with Hong-Kong listed China Wireless' Indian joint venture, Coolpad Communications. Reliance Webstore signed a strategic distribution contract with Coolpad Communications gaining exclusive rights to market and distribute Coolpad's dual-mode smartphones in India.

Coolpad, as part of its growth outlook, plans to establish an R&D unit in India. According to Mr Sami Al-Lawati, China Wireless' India Head and Managing Director of Coolpad Communications, "We are currently scouting various locations across India for Coolpad's R&D centre. The R&D unit in India will be critical to our business growth in India and our expansion across the Globe."

Coolpad has decided to invest Rs 400 crores in India by the next three to four years. The funds will be lifted through internal accruals and debt.

To further fortify its association with Reliance ADA Group, Coolpad is setting up a dedicated R&D facility and resources in Shenzhen, China.

The special R&D unit will liaise with Reliance Webstore teams across India to seek customer feedback and develop differentiated products for the Indian market. Coolpad will also leverage the pan-India retail and distribution network of Reliance Webstore to enhance sales of its dual-mode smartphones in India.

"Given our unique strengths in the dual-mode and 3G segments, we envisage a major upside for Coolpad as Reliance Webstore enters the handset distribution business in the backdrop of India's emerging 3G scenario," said Sami Al-Lawati.

The test-marketing results and subsequent launch of Coolpad smartphones in India indicates the great potential for smartphones in India. The Coolpad smartphones are expected to contribute over 30% of the overall handset sales at Reliance World and Reliance Mobile Stores.