Mobile sales plummet by upto 90% post demonetisation, iPhones worst hit

Sale of iPhones hits the bottom; firms to postpone new launches; shipment might fall short of 2016 target

Mobile handset sales have plummeted since the Indian government scrapped old currency notes of Rs 500 and Rs 1,000 on November 8. While the sale of mobile handsets across price points has suffered since, retailers say sales of high-end brands such as Apple iPhone have plunged by 90% across metros and towns.

In a market where majority of the transactions at the retail level take place in cash, sale for handsets declined by 50-90% during the past six days across the country.

While the sale of high-end smartphones has come to a standstill in smaller towns and semi-rural markets, markets in major cities, too, have suffered heavily. According to Sheikh Hussain Ali, a large-scale trader at Delhi’s Nehru market where cash is primarily used for transactions, smartphone sales have gone down by 80 per cent. “The sale of low-end handsets such as feature phones, too, has halved.”

“Our sales are completely down ever since the demonetisation occurred. The top-end models of top branded companies are not being sold now. Only the lower-priced models are in demand now,” said Gulshan Arora of Vansh Telecom, a handset retailer at Dehradun. Gurpreet Kaur of Balaji Mobile in Lucknow said: “The sales are down by almost 90% after the demonetisation was announced by the government. Cheaper brands have been badly hit compared to expensive brands.”

While sales have declined across the country, the nature of slowdown is not similar, a senior executive with one of the major handset manufacturers said. Sales have been impacted on e-commerce platforms, too, as nearly 60 per cent of the transactions happen through cash-on-delivery model.

“Market sentiments have been hit and people are saving cash for their basic needs. In terms of supply chain, we believe retailers will have inventory issue while OEMs (original equipment manufacturers) may defer new launches till the situation streamlines. In such a scenario, we might see an increase in EMI and digital wallet offers from retailers/OEMs to cater to the demand and ease out inventory situation,” said Tarun Pathak, senior analyst at Counterpoint Research.

While the step of demonetising key currency notes came after the Diwali was over, the current slump might hit the yearly sale of handsets in India this year. During the January-September period, some 89 million handsets have been shipped, compared to the estimated shipment of 120 million smartphones in 2016. Analysts point out that since the currency turmoil has hit the market for two out of the three months in the crucial October-December period, sales are bound to miss the target this quarter. Feature phones shipment might fall below 2015 level (145 million units) as well.

To offset the loss in sales, some of the retailers have come up with instalment schemes as well as ‘buy now pay later’ programmes. However, as liquidity crunch is expected to sustain in the coming weeks, handset sales are unlikely to normalise soon, an industry executive said.

(With inputs from Shishir Prashant, Dehradun & Virendra Singh Rawat, Lucknow)