Zoozoo rakhis, anyone?


July 24, 2009

By Gouri Shah

LIVEMINT.com (A Wall Street Journal Partner)

Fri, Jul 24 2009

After making their debut on television ads during the Indian Premier League earlier this year, the lovable egg-headed Zoozoos quickly made their way onto comic strips, newspaper mastheads, birthday cakes, wedding cards, shoes, T-shirts, key chains and even rakhis, as clever local and Chinese marketeers cashed in on their popularity with fans. Now, creator Vodafone Essar Ltd is planning to launch official Zoozoo merchandise with retail chain Shopper’s Stop Ltd.

“We are in discussions and are very close to signing the deal,” said a senior official from Shopper’s Stop Ltd, who did not want to be named, citing company policy. This was also confirmed by a senior advertising executive familiar with the development, who added that Shopper’s Stop was still scouting for good suppliers to produce the Zoozoo merchandise. It’s a delay that could cause the official Zoozoo creators to lose revenues to pirated merchandise producers.

Shoppers Stop is likely to manufacture and market Zoozoo T-shirts, bags, clocks, dolls, mugs and key chains, among other things. “The merchandise should be out soon, possibly within a month or two,” says Rajiv Rao, executive creative director, South Asia, Ogilvy and Mather Pvt. Ltd, who created the Zoozoo campaign.

Shoppers Stop has so far produced branded apparel and accessories for films such as Farah Khan’s Om Shanti Om and, more recently, for the forthcoming Saif Ali Khan starrer Love Aaj Kal. Barring a slightly unsuccessful licensing deal with Disney almost a decade ago, this will be the firm’s only attempt to produce branded character merchandise. It’s an area few retailers want to venture into, considering the vast amount of knock-offs available at every price point in the market.

“Character merchandising is easy to copy and there really isn’t any control on violation of intellectual property,” says Govind Shrikhande, customer care associate and chief executive for Shoppers Stop Ltd.

He explains that unlike film merchandise, which has a shelf life of 10-12 weeks—allowing merchandisers to move in and move out before the knock-offs had even arrived—character merchandising is a greater challenge, especially if the official merchandise is expensive, thereby encouraging the demand for cheaper knock-offs.

According to Shrikhande’s estimates, the size of the branded merchandise market is around Rs1,050 crore. Of this, film merchandise accounts for Rs50 crore, character merchandise from the largest player in the market, Disney, for Rs500 crore and another Rs500 crore is for other popular characters such as Ben 10, SpongeBob SquarePants, Hanuman and so on.

For Indiangiftsportal.com, an e-commerce site hosted by Intermesh Shopping Network Pvt. Ltd, it made good business sense to stock products featuring the Zoozoos. “In the last 15 days, the site has sold close to 100 Zoozoo rakhis,” says managing director Manan Sharma. The rakhis cost Rs300 each and include a card, a handmade box, courier and credit card charges. “The little Zoozoo characters are manufactured and sourced from China, the colourful rakhi ribbons and threads are added here,” he says, adding that his attempts to win an official licence for Zoozoo merchandise had come to nought. Was he worried that he would be sued for infringement of intellectual property rights? He says, “Why should it be a problem? We are making the Zoozoos popular!”

Online merchandise site Myntra Designs Pvt. Ltd has been a little more cautious.

“We have 4,000 creative designers on our site who contribute their own designs and in the recent past, we’ve had to reject at least 15 T-shirt designs that were based on the Zoozoos due to copyright issues,” says Mukesh Bansal, chief executive, Myntra Designs, an e-commerce site that also enables users to create and design their own merchandise. “However, we allow consumers to place orders with their own images and we’ve had two-three customized T-shirt orders like that, with images of Zoozoos.”

No surprise there, considering the character’s broad appeal and popularity. The official Zoozoo fan club page on social networking site Facebook has at least 313,129 fans. Experts maintain that such branded merchandise serves well for the brand as well as the retail partner. “For the brand, such merchandise reinforces the image. For the retailer, each time there is an ad, you get to ride on the popularity of the character. So in that sense, it works beautifully for both parties,” says Devangshu Dutta, CEO, Third Eyesight, a retail consultancy firm.

Vodafone Essar on their part is choosing to remain tightlipped about the deal. “Discussions are on, but I’m not sure if we will be able to do anything. To begin with, we have no experience in this (merchandising) business and secondly, there is still so much we have to do in the telecom business…we’re not ruling it out. As and when we have the bandwidth, we will consider it. As of now, we haven’t zeroed in on anything,” said Harit Nagpal, director marketing and new businesses, Vodafone Essar. “We don’t need to overdo a good thing.”

The mobile services provider has three ongoing campaigns: the pug to convey customer service, Bollywood actor Irrfan Khan to communicate the brand’s value for money products and the Zoozoos to communicate their products service and offering. Industry watchers believe that the last could eventually go on to promote more than just value-added services for the mobile services provider.