Hello.
In Russia, retail players and even marketplaces are launching their own private labels; we see examples in a very wide range of goods, from food to electronics. For retail players selling electronics, the role of manufacturer is not entirely typical, but in the last few years this model has been resorted to more and more often. Moreover, we see different strategies for working with private labels. The price of such solutions does not have to be minimal; de facto, it can be anything, and retail directly competes with its suppliers, offering its own private labels and focusing on them in sales. Attempts to abstract from one’s own products and sell them along with other manufacturers, as a rule, turn out to be a utopia – this approach does not work.
To understand a little about how your own brand can be structured, I suggest looking at the strategy of such players as Megafon (Fontel electronics brand) and restore: (the brand name is exactly the same). I specifically took two borderline cases to illustrate the difference in approaches and the range of problems being solved.
Typically, our idea of retail is limited to the design of a particular store and its location relative to where we live, be it an office or an apartment. Few people think about the geography of the retail network, about who, besides us, visits such stores, and most importantly, what purposes they serve. Of course, the biggest goal can be considered to be making money, but different tactics are used for this. The description of the client who visits one or another store also varies greatly.
For example, the combined retail network of Megafon and Yota covers almost the entire territory of the country: stores with the operator’s logo can be found both in megacities and in small towns. We can say that operator retail reaches far corners of the country. At the same time, the restore retail network looks completely different: a different format and different customers. It is represented in megacities and targets only a certain segment of consumers who choose expensive devices. In the past, these were only Apple products; now stores are turning into a multi-format in terms of brands, but a high average check remains as an integral attribute.
Another difference: for the operator, the store is a point of communication with the client, primarily with people who use communication services. For restore: services are secondary; the sale of specific equipment presented on the shelf comes to the fore. This difference in approach is immediately noticeable. The format determines the creation of private labels, which will vary as much as the stores themselves and the products in them.
Megafon has extensive experience in launching private labels; for example, you can recall the Login smartphone, which has become one of the most popular in Russia.
In 2013, the operator addressed the issue of saturating the market with inexpensive smartphones and introduced the audience to a new class of devices. The success was stunning, several models were released, plus tablets appeared under the same brand. But then different problems were solved than today.
Fontel’s own brand began with simple push-button telephones. Fontel is developed and supplied by Megafon’s subsidiary Revo Charge. Megafon launched a line of push-button models and ensured their sales, which became the first stone in the foundation of the success of this private label.
In addition to the affordable price, interesting price/quality ratio, the operator guarantees that such push-button phones will not have any surprises when working on the network and built-in undocumented functions – the products are tested in the operator’s own laboratory in St. Petersburg, and they are guaranteed.
The Fontel “button” appeared in January 2023; in 2024, sales of push-button phones were four times higher than last year. At the moment these are nine different phones, they are sold throughout the country, the geography is very wide. And these are affordable models; Fontel’s share in the push-button telephone market is noticeable.
In addition, the company launched smart watches under the Fontel brand for different age categories, there are both children’s models and adults. Almost two dozen different devices that also look like an affordable offering. The next step is the appearance of a couple of tablets.
I will quote the press release, which provides the characteristics of the models:
“Fontel tablets are available in two models: FT800 and FT1000. The new products provide support for voice calls, LTE and micro-SIM, Wi-Fi, Bluetooth and GPS.
Both devices have a built-in memory of 32 GB, in addition, the tablets are equipped with a slot for a removable microSD memory card. So there will be no problems with free space for storing films and photos.
The FT800 model has a screen diagonal of 8 inches with a resolution of 800×1280 pixels. The model is equipped with a 2.0 MP main camera and a 0.3 MP front camera. The screen diagonal of the older model FT1000 is slightly larger and is 10.1 inches, and the resolution is 1280×800 pixels. The clarity of the main camera is 5.0 megapixels, the front one is 2.0 megapixels.”
Please note that the tablets have support for SIM cards and the operator has adapted them to their network. They are the most inexpensive with LTE support, and with guaranteed network operation. There are many application scenarios for such devices; they are often purchased, oddly enough, for corporate use. And at the same time, there is no such combination of characteristics on the market – when we have budget hardware, but with it we have an LTE modem. Typically, a cellular module is added to models in the mid- or high-price segments.
In this example, we see that the operator finds niches in which there is demand, demand for cellular communications, and goes into them. This is a systematic approach, it is aimed at strengthening the company’s core business, and private label serves this great purpose.
Let’s take a look at the example of a private label from restore: this brand focuses on replacing original accessories with its own models.
The audience buying an iPhone in 2024-2025 definitely has money, as this product is expensive, as are all the accessories available for the smartphone. The idea of a private label is to provide guaranteed quality, select the best Chinese accessories and stand out due to a warranty period of five years (no one in Russia gives this).
Such a huge warranty period dictates a different economy: any accessory becomes expensive. But since the original models from Apple are already extremely expensive or are not available as a class (for example, the company simply does not make desktop wireless chargers), the result is a more or less sane offer. The emphasis is on loyalty to the restore: brand, which is why we see the repetition of the company name in the names of the products. The game is somewhat risky: if something goes wrong, all the negativity will turn not only against a specific product, but also against the company as a whole.
At Megafon, risk management is implemented differently: even if market conditions change, if for some reason you have to abandon Fontel (there are no such plans, this is a hypothetical scenario), this event will not have any impact on the Megafon brand.
For restore: the basis for the formation of private labels is the search for popular categories, high-quality goods with high margins. Using the loyalty of its customers, the company provides them with replacement products, but there is no systematic approach, as in Megafon. A simple and clear question is being resolved: private label provides greater profit in sales and supports the retail economy.
Megafon, at the expense of Fontel, is bringing to the market devices that are not available on it or are not widely represented – try to find an inexpensive tablet with an LTE module that is guaranteed to work properly.
When discussing any private label, we need to look and evaluate what products are being created, for what audience, and whether there is an emphasis on the loyalty of retail customers. From this we can already draw a conclusion about the parameters of STM. But here you need to remember that there are no universal recipes and each such brand is different from the other, since it is created for a specific retail chain and serves to solve specific problems. It is important to understand what these tasks are in order to further be able to evaluate the approach itself. I hope that this short story will allow you to see the differences between private labels on the Russian electronics market, although the topic, of course, is much broader and richer.
Source: mobile-review.com
