This Diwali, you didn't really mean it. Did you?" read the advertisement released by the Archies Greetings & Gifts Ltd in November this year. Upset by the 8-10 per cent fall in card sales this Diwali as compared to last year, Archies' word-heavy ad questions the significance and individuality of SMS (Short Text Messaging Service) greetings that were perceived as the prime reason for the drop in sales.

At Rs 55 crore net worth, Archies is the biggest player in the greeting card industry, but not the only one that could do with a get-well-soon card. In the past two years, the nearly Rs 200-crore plus greeting card industry has remained stagnant, even shrunk. The slowdown of the economy and fall in people's purchasing power-besides sundry other factors like the postal strike in December last year, Gujarat quake and Valentine's Day fracas-are to blame. But what is making a crucial difference, especially in bigger cities, is the fascination for alternative greeting options like e-cards and SMS.

"I'd rather send a personalised SMS greeting than buy mushy, gaudy cards," says 27-year-old model-actor Aryan Vaid, whose penchant for SMS has as much to do with the unimaginative paper cards as with speed and convenience. So, while in college Vaid bought paper cards twice a month, now it's down to once in six months.

The bytes are indeed competing successfully with the glossy images and rhymed verses of paper cards. Consider this. Last year, in Mumbai, cell-phone service provider BPL Mobile saw a traffic of one lakh messages each on Diwali and New Year's day. This year, it was up to a mind-boggling 1.5 million on Diwali and the same is expected on New Year's eve. Fellow competitor in Mumbai, Orange's festive messaging statistics show an even steeper rise in traffic. Compared to only 25,000 messages on Diwali last year, the number soared to over a million this season; while 1.5 lakh messages were sent on New Year's day last year, over a million are expected this year. At Birla-Tata-AT&T, which offers mobile services in Maharashtra, Gujarat and Andhra Pradesh, the SMS traffic is growing at 30-35 per cent a month. This Diwali saw at least a million outgoing messages across four circles.

BUSINESS Digital Divide "The fall in growth rate in our case has been compounded by external threats like digital greetings." Rajesh Syal, GM, Archies "Only the leader is being adversely affected currently, not the second or third lead players." Rajesh Vaishnav, MD, Vintage "I'd rather send a personalised SMS greeting than buy mushy, gaudy paper cards." Aryan Vaid, Model-Actor

So, is the urban mobile owner or one with access to the Internet completely forsaking the mandatory card? "When launched, e-cards were free, but today most e-greeting sites have become paid sites. Similarly, SMS too will soon become expensive. Then we will be on a level playing field," claims an optimistic Rajesh Vaishnav, managing director of the Vintage Cards & Creations Ltd. The company believes there's still space for growth-it plans to take its current marketshare of 15 per cent to 50-70 per cent in the next six years. "Only the leader is adversely affected in the current environment, not the second and third lead players," adds Vaishnav.

The leader, Archies, that has a tie-up with the American Greetings Corporation, has seen its Compounded Annual Growth Rate (CAGR) fall from 25 per cent in six years (1996-1999) to 15-18 per cent in the past two years. Explains Rajesh Syal, general manager (marketing west), Archies: "During recession, people tend to cut down on non-necessity items like cards and gifts. The drop in our case has been further compounded by external threats like digital greetings."

Vintage, the second largest greeting card player and the sole Indian licensee of Hallmark, saw a CAGR of 25 per cent between 1996 and 2000 but admits to a Rs 11-crore loss in the financial year ended March 2001. It doesn't have to do with recession and e-greetings alone, reasons the firm. The losses are being attributed to the recalling of stocks worth Rs 18 crore from the distributors to replace an archaic system of distribution.

But even as the industry is unanimous that the impact of e-card is fading, it is worried about SMS-SMS is hands on, faster, doesn't involve Internet connectivity and works out cheaper than e-cards considering that one pays for Net accounts as well as additional telephone bills. While e-greetings have harmed the one-on-one personal card section, the business section is more comfortably placed: corporates continue to place huge orders for old-fashioned paper cards to send the season's greetings.

The diminishing growth rate hasn't stopped some players from jumping on to the papyrus bandwagon, the youngest entrant being Expressions from the ITC stable. In January 2002, it launched cards priced between Rs 4 and Rs 50 nationwide and claims it has already secured a 5 per cent marketshare. Its defence against doubts on growth rate? According to a 2000 market study conducted by it, the greeting card industry had a 15 per cent CAGR but a very low per capita consumption of less than half a card per person per year. Read, a big business pie with a large chunk left uneaten, never mind the hiccups the industry is facing.

Argues Chand Das, CEO, Expressions: "At the end of the day, all trends acquire an equilibrium. Why else do you think the physical card markets in technologically advanced countries still continue to grow? The other factor in favour of paper cards is that when people start cutting down on buying gifts, they often buy more cards instead."

Despite presenting a brave front on the threat of new greeting options, most card companies are furiously drawing alternative strategies behind closed boardroom doors. Vintage is focusing on comparatively safer markets-towns with population of up to five lakh that do not display the same Internet and mobile usage patterns that metros do. Expressions is planning to produce vernacular cards. The realisation that corporates tend to choose NGO seasonal greeting cards has also seen the firm enter into a five-year agreement with SOS Children's Village to market cards under the SOS brand name. Archies removed the free e-greetings option from its website five months ago and is the first in the country to provide e-cards on subscription.

With spreading Net connectivity, digital communication devices being churned out each day and the number of mobile phone subscribers continuing to grow-according to the Cellular Operators Association of India, 213,572 subscribers were added in November 2001, a 78.1 per cent rise over the same month last year-the road ahead for traditional cards might just get bumpier.