ARCHIES: THE WAY

INDIANS GREET

By
M D Aparna
Juhi Kapoor
Neha Tyagi
Natasha Vashisht
Ashwin Nanyam
Varun Gupta
Flow of the presentation
 Introduction
 Corporate Clients
 Retail channels
 Question 1
 Question 2
 Question 3
 Question 4
 References
Introduction
 Anil Moolchandani and his brother Jagdish
Moolchandani started a partnership firm ‘Archies Gifts
and Greetings’.
 Theme cards being introduced such as Valentines Day,
Friendship Day, Father’s Day, Mother’s Day and so on.
 In 1984, They launched the first Archies Outlet in Delhi
named ‘Gift Gallery’.
 In 1987, they launched first Archies exclusive gallery in
Kamla nagar in Delhi.
 In 1990, Archies Greetings became Archies Greetings
and Gifts Pvt. Ltd. which took over the partnership firm.
 By the end of 1990s it operated in 3
businesses
Greeting cards
Gift items
Stationery products
 In 1994, International collaboration with
American Greeting Corporation
Gibson Greetings
Portal Publication
Kingsley of UK and
Kel Geddes of New Zealand
 Corporate clients
 Reliance
 Samsung
 LIC
 Birla International
 Dabur
 4 dedicated branch offices in Mumbai, Ahmedabad,
Ludhiana and Hyderabad
 Retail Channels
 Archies Gallery
 Archies Card Shop
 Paper Rose Shoppe
 Archies Feelings
 Premium Archies Gallery or Vision 2000 stores
 Other retail stores
 In 1995, Archies became a Public Ltd. Co.
with an initial offering of Rs. 74 million and
the issues were oversubscribed 4.5 times
 In 2000, Archies launched its portal
archiesonline.com for Archies cards, gifts,
stationery, music and perfumes online
purchases.
Meet, greet and gift
STRATEGIES EMPLOYED
FRANCHISEE MODEL

 The franchisee model contributed a great deal to

success of Archies’.

 This model helped Archies’ cut down on real estate

costs.

 This model also helped Archies’ to share advertising

and promotional expenditures with the franchisees.

 Franchise owner had the option of exchanging profit

making products for less profitable ones.
Franchise operations were divided into three
segments-
 Top level franchisees ran Archies’ Galleries.

 Middle level franchisees ran Card Shops and

Paper Rose Shoppes.

 Bottom level franchisees ran feelings and other

retail outlets.
LOCALISATION STRATEGY

 The companies’ localization proved to be one of the

most effective strategies.

 The smaller players only sold cards for Christmas, new

years etc.

 Archies’ came out with cards for festivals like Holi,

Diwali, Rakhsha bandhan etc.

 These initiatives were backed by aggressive

promotional campaigns.
TIE UPS

 Archies’ tied up with companies like Pepsi and

Pidilite to build strong brand equity

 Archies’ tied up with HelpAge to build its

corporate clientele.

 Archies’ entered into arrangements with production

houses and released movie specific items like
greeting cards, pic frames etc.
E-GREETINGS

 In May 2000 Archies’ launched archiesonline.com.

The website had three sections-

 Meet section had free services like email, chat,

reminder services, scheduler.
 Greet section was a customer interaction where
they could send free animated e-greeting cards.
 Gift section gave the customers an option to
purchase gifts and have it delivered.
 Arrangements were made with Elbee and Blue
Dart for speedy delivery of gifts.

 A tie up with Easy net com ensured secure online

payments.

 In order to secure online penetration, the company

tied up with portals like yahoo.com, jaldi.com,
Indiagreetings.com Mantraonline.com and
Uthplanet.com.
 E-kiosks were launched to attract NRIs and bridge
a gap between internet and retail outlet models.

 In the later stages, free services of E-greeting was

proved to be very expensive hence
archiesonline.com was made a paid website.
OTHER STRATEGIES

 In 1990 Archies’ decided to revamp its distribution

network.

 A C&F network was introduced to ease up the logistics.

 10 C&F agents were appointed who supplied the

products to the distributors.

 Archies’ could cut down on the inventory costs as a

third party company was managing the inventory and
logistics.
 In 2000 Archies’ began an exclusivity drive where
Archies’ Gallery franchisees were asked to keep only
Archies’ range of products.

 Franchisees were given an option of converting into an

Archies’ Paper Rose Shoppe on a ‘non exclusive ‘ basis.

 Archies’ also planned to increase the number of ‘vision

2000’ stores which were much bigger and had world
class interiors.
Question 1
Analyse the circumstances in which Anil Moolchandani started Archies
and highlight the reason for the company’s runaway success. Why do you
think Archies could not sustain its profitability growth in 2000-01
 Archies was the result of innovative
mind of Anil Moolchandani. His family
business was selling saris but in 1970
he decided to buy & sell good quality
posters.
 Later when demand increased he
started getting posters of film stars,
natural sceneries etc printed by local
printers.
 Later on he decided to enter the
Greeting cards business.
 In India cards were sold out of dusty
shoeboxes.
 In 1979, Anil & his brother Jagdish
Moolchandani got ‘Archies Gifts &
Greetings’ registered as a patnership
firm.
 On his visit to South East Asia, realized
there were exclusive greeting cards shop
with good ambience and soft backdrop
music.
 He decided to try out the concept in India
and launched ‘Gift Gallery’ in 1984 in Delhi.
 Initially launched cards for Valentines Day,
Mother’s day, Father’s day, Friendship day-
to catch the fancy of teenage shoppers.
 In 1987, first exclusive Archies Gallery
was set up in Kamal Nagar, Delhi
University. It became an instant hit with
sales touching Rs. 2.2 million in first
year itself.
 In 1995, Archies was incorporated as a
public limited company, with IPO of Rs.
74 million.
 By 1990s, Archies was operating in
three businesses.
1. Greeting cards: contributed 69% of the
total revenue, with sales volume of 85.8
mn cards.
 Gift items: contributed 15% of total
revenue. Includes items photo albums,
frames, clock, stuffed toys, mementoes,
sunglasses etc
 Stationery products: contributed to
16% of co’s revenue. Includes items
such as autograph books, diaries,
calenders, posters, gift wraps, designer
& fancy sationery.
 Its products were marketed through
following channels:
1. Archies Gallery- first exclusive store,
500-1000 sq ft in size.
2. Archies-The Card Shop- smaller in size
than Archies galleries.
3. Paper Rose Shoppe- shops with an
area of 100-150 sq ft with around 85%
of Archies merchandise.
4. Archies Feelings- In april 2000, Archies
took over the popular 25-store
‘Feelings’ chain of greeting cards.
5. Vision 2000 stores- They were premium
Archies Galleries, exclusive Archies
showrooms with lot more shelf space
than other outlets.
Factors responsible for success of
the company
 The company adopted localization
strategy.
 They became the first one to come out
with cards for Indian festivals like Holi,
Diwali, Rakshabandhan.
 Made tie ups with companies like Pepsi-
helped in building strong brand equity.
 Vision 2000 stores provided perfect
ambience for shopping.
 Introduced cards in Indian language
such as Marathi cards for Sankranthi,
Gurumukhi cards for Baisakhi, Hindi
cards for Ram Navami, Cards for Easter.
 In 2002, announced a tie up with Blaze
Flash Couriers to launch ‘Express
Wishes’.
 The company had alliances with
premium brands to establish their shop-
in-shop corners within Archies.
 It made arrangements with Movie
producers and released a host of music
specific products.
 The company launched cards with new
designs every month to keep its portfolio
updated.
 It has distributors for cards for Indian
festivals in U.S, U.K, Middle East, South
Africa & South East Asia.
 Company also sold cards under the
Help Age brand.
Reasons for not performing well in
2000-01
1. The Hindu Fundamentalist Groups-
Shiv Sena, Vishwa Hindu
Parishad(VHP) & Bajrang Dal- attacked
valenties day celebrations.
 They claimed that the concept of
valentine’s day was against Indian
culture and hence companies should
not be allowed to use sexually explicit
images/words and make money from it.
2. When in 1990s e-card became popular,
Archies launched its e-greetings
website- archiesonline.com. But the
company could not achieve much
success in this sector.
 In order to increase their revenue,
company started charging users. As a
result 0.6 million registered users
stopped using the service.
3. Also the company’s plan to convert its
franchisee outlets into company owned
outlets and its distributor setup into a C&F
agent, were proved to be major burdens
on its finances.
 As a result in 2000-01, company
experienced a negative growth. Turnover
declined from Rs.710 mn to 680mn & net
profits from Rs.130mn to Rs.91mn.
Question 2
Critically Comment on Archie’s franchising and distribution strategies for
expansion. Do you think the company’s strategies in the initial years was
right in the light of the rationalization exercises? Give reasons to support
your stand.
 The Archies’ had a strong and vast
distribution network covering every major
state in India and even remote towns.

 Products sold through around 8000-10000

Multibrand retail stores across the country.

 Serviced through 70 dedicated company

distributors.
 Four branch offices in Mumbai ,
Ahmadabad,
Ludhiana and Hyderabad to extend its
reach and penetration.

 Branch offices catered to both Franchisees

and retailers inturn managed by company’s
representatives as well as its C&F agents
RETAILING CHANNELS
• The first concept
Archies store opened by
archies, typically
gallery 500-1000 sq. ft in
size

Archies • Smaller in size than

the Archies Galleries
the card
shop
 • Shops with an area of 100-
Paper Rose 150 sq. ft with around 85%
Shoppe of archies merchandise.

• In april 2000,Archies took over

Archies popular 25-store ‘Feelings Chain’ og

greeting card and gift outlet in the
state of Gujarat.
Feelings • Following the feelings outlet was
renamed as’Archies Feelings’
Premium • Exclusive archies
archies showrooms housed at
prominent locations,
galleries or spread over a larger area
vision 2000 with a lot more shelf
stores space than other outlets.

Other retail
outlets
Franchisee model
 Archies’ Franchisee model contributed a lot to
its success.

 Created a branded Franchise- also first mover

advantage.

 By franchising- able to save a lot of real estate

costs also share advertisning and promotion
expenditure with the franchisees.
 Franchisees made own investments in the
business and paid royalty for Archies turnover
generated from sale of Archies products.

 Franchising agreement- exchange products

which were not sold with more profitable ones.

 Group Advertising-Franchisee paid a fixed

amount to company every month.
 Quality control team monitored franchise stores
ensuring – AMBIENCE , SPACE
ALLOCATION , LIGHTING AND DISPLAY
STANDARDS.

 Franchisee operations divided into three

segments, targetting different franchisee
operations.
 TOP LEVEL
FRANCHIS
EE-
ran Archies
galleries

MIDDLE LEVEL
FRANCHISEE- Archies card
shop &Paper rose shoppes

BOTTOM LEVEL- Feeling and other retail

outlets
 Yes the company’s strategy in the initial years
was right in the light of the rationalization
exercises.

 The company decided to revamp the

distribution network in 1999-00. replacing it by
a C & F agent network.
 According to the new distribution system in place
of 68 distributors in 21 states, Archies appointed
10 C & F agents in 10 states catering to
distributors who in turn catered to retailers.

 Biggest Advantage- Company owns the inventory

 Consumer is ensured of seeing entire products

range that is available.
 Distributor’s involment in product placement
minimum.

 Company could push entire range of products

into the reatil channel.

 With C&F agents and exclusive outlets

company could better revamp its product
portfolio.
 Cost cutting – Distributor’s margin was 25-30%
while C&F margin was 12%

 Helped Archies penetrate deeper into the

markets because of wider reach.

 Potential of enlarging company’s retail network.

Question 3
Do you think the measures taken by Archies to meet the threat of e-
greetings were adequate? Was the company’s decision to make its website
a paid one, a sound business move? Justify your answer
Tackling the threat of e-greetings
 Launches archiesonline.com
 Three major sections-meet, greet & gift
 Meet-services like free e-mail, chat, reminder
services & a greetings scheduler
 Greet-was a consumer interaction area where
registered customers could send & receive
animated e-cards, greetings online for free
 Over 700 e-cards available(different from the
usual e-cards available online)
 E-cards..8 sec. long story line with sound effects
 Gift-purchase gifts & get them delivered at their
doorstep.
 Free delivery for Delhi customers, Rs.25 for rest
 Tie ups with courier companies like Elbee & Blue
dart to deliver gifts & cards purchased.
 Making revenues by selling content on royalty
basis, sell banner advertisements.
 B2B platform, Created a virtual market place for
retailers & distributors who could have easy access
to the company.
 This in turn attracted many more retailers &
franchisees.
 Strategic alliances with various portals, to
secure online penetration in various youth-
oriented portals by leveraging the Archies
brand equity.
 Novel concepts for Diwali like e-crackers,
can also perform religious rituals online.
 No. of registered users reached 0.6 million.
Paid Website- Sound decision or not
 Yes, definitely it’s a sound move because:
 No. of e-greetings sent touched 54 million.
 Company gained no monetary benefit,
 Venture was proving to be a drain
 Company invested 20 million in the online
subsidiary but made just 2 million from e-
commerce.
 CTC for a single card was Rs.6000
 Accumulated losses of 13.5 milllion, so can’t
continue with it.
 Tie-up with indiatimes.com (50:50 profit
sharing agreement)
 Archiesonline.com charged Rs.399 per user for
100 e-cards per year.
 Users were also given 10 paper cards worth
Rs.180 from Archies, a music CD & a cassette
& 10% discount coupons for shopping at
Archies Gallery & Planet M stores.
 No need to have millions of customers
accessing the site.
 Create an experience to the customers.
 Underlying Idea- the site should complement the
existing physical business.
 Equated e-cards with fun
 Serious expressing of emotions by physical
cards.
 Campaign says “when you really mean it, send
an Archies card”
 E-greetings are not effective as physical greeting
cards.
 Online ventures were an extension of its
business rather than a thrust area for future
growth.
 "The unique thing about cards is that they
are preserved by the recipients, whereas an
e-card or SMS is junked immediately.
 Emotions do not tend to emerge as strongly
as they do in paper greetings.
 Once customers see the product or touch the
product, they would be enthused to purchase
the same.
Recommendations
Archies
 Company was going through a rough patch
 Facing a financial crunch
 Reconsider moving into new business
avenues (Theme and Amusement park,
Cakes and confectionaries, Play schools)
 Supplying to the corporate gifts market,
which provides a more stable source of
revenues.
Question 4
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
Survival Strategy
• Decided to focus more on gift segment

• Make Archies gallery a ‘one stop gift shop’

• Emphasis on outsourcing high end gift articles

• Focus on corporate sector

• Planned to launch a new range of economy cards (priced around

Rs.10) called ‘Heart Warmers’ for small towns

• Plan to have 100 Vision 2000 stores which will contribute at least
40% to sales
Long Term Strategy
 Offers and promotional schemes undertaken

 Tap all the Indian festivals and occasions

 Popularize western occasions in India(Halloween, Easter)

 Continuous focus on its USP - Innovation

 Promoted their props through Bollywood(I hate luv stories)

 Basic idea was to sell emotions

 Re-indulge in its Dotcom

References
 ICMR case studies on Cosumer
Behavior
 www.archiesonline.com
 Archies commercial from
www.youtube.com
Queries?
Thank you