Archies: The Way Indians Greet

 
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Case Details:

Case Code : BSTR036
Case Length : 14 Pages
Period : 1979 - 2002
Organization : Archies Greetings & Gifts Ltd
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Gifts and Greetings

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"It (Archies) is a phenomenon that touches your life from womb to tomb."

- An Archies Retail Outlet Owner, in December 2001.

A Company in Trouble!

In February 2002, the Delhi High Court dismissed an application for injunction filed by leading Indian greeting card and gift company, Archies Greetings & Gifts Ltd. (Archies). The company wanted a stop order to restrain Hindu fundamentalist groups - the Shiv Sena, the Vishwa Hindu Parishad (VHP) and the Bajrang Dal - from 'interfering in the Valentine's Day celebrations and sales promotions in its showrooms and outlets.'

Archies filed the application fearing that the groups will vandalize their outlets as they had in February 2001.1 The Court's decision shocked Archies'management, for any disruption of business on Valentine's Day would translate into huge revenue losses for the company. Director Vijayant Chhabra said, "Everyone knows what happened last year. Our outlets were targeted in Mumbai, Delhi and other parts of the country. Our business has been affected severely." The dismissal of the injunction appeal came at a time when the company was facing a host of problems on various other fronts that were taking a toll on its performance. In the late-1990s, e-cards became very popular. Archies was forced to launch its own e-greetings website, archiesonline.com, through its wholly owned subsidiary Archies Online.com Ltd. in mid-2000.

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However, by late 2001, the company made archiesonline.com a paid service. Youhan Darrab Aria (Aria), Chief Officer (Logistics and Finance) of the portal commented, "E-commerce was not happening from our site as expected and ads were also not forthcoming. We wanted to increase our revenue and charging users was the solution." As expected, a large number of the 0.6 million registered users stopped using the service.

Aria admitted, "We have suffered massive drops in our registered user base since we became a paid site." In addition to these problems, Archies' initiatives to convert its network of franchisee outlets into company-owned outlets and its distributor setup into a carrying and forwarding2 (C&F) setup were proving to be major burdens on its finances. As a result, in 2000-01, for the first time in it's over 20-year history, the company experienced a negative growth. Turnover declined from Rs 710 million in 1999-2000 to Rs 680 million in 2000-01, while net profits for the same period declined by around 32% from Rs 130 million to Rs 91 million.3 Archies' marketshare remained at 45% between 1998 and 2000. Analysts remarked that the company's leadership status in the Indian greeting card and gifts market seemed to be doing it no good in increasing its market share and sustaining profitability.

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1] The fundamentalist groups 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. Reportedly, these groups resorted to vandalism and violence in various parts of the country to stop celebrations associated with the day.

2] C&F agents appointed by manufacturers and distributors of goods, provide clearing and forwarding services. Their operations include receiving, warehousing, and dispatching goods, and maintaining records and invoices.

3] In September 2002, Rs 48 equaled 1 US $.

 

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