 "Offline smartphone stores steal a march over online players")
The government’s move to restrict discounts on e-commerce marketplaces has resulted in the share of smartphones sold online in India drop seven percentage points to 28 per cent in the quarter ended June 2016. Offline retailers gained with this shift, as customers found little difference in smartphone prices to buy from neighbouring mobile stores.
At the same time, overall smartphone sales witnessed recovery after two bad quarters to grow by 17 per cent to 27.5 million units, tech researcher IDC said on Friday.
In March, India came out with revised guidelines for foreign direct investment in e-commerce marketplaces, which mandated that firms such as Amazon and Flipkart do not influence price of goods sold on their platform. The April-June period is the first reporting quarter since the new rules came into effect.
“This has got everything to do with the regulations that the government came out with to stop indiscriminate price discounts, which were a big attraction for online sales. The regulations imposed by the government have levelled the playing field between online and offline retailers for pricing,” said Jaideep Mehta, managing director (India & South Asia) at IDC.
“Since the main attraction for online players was more flexibility and affordable prices, that advantage has gone.”
In the January-March quarter, online sales accounted for 35 per cent of smartphones sold in the country.
At the same time, overall smartphone sales witnessed recovery after two bad quarters to grow by 17 per cent to 27.5 million units, tech researcher IDC said on Friday.
In March, India came out with revised guidelines for foreign direct investment in e-commerce marketplaces, which mandated that firms such as Amazon and Flipkart do not influence price of goods sold on their platform. The April-June period is the first reporting quarter since the new rules came into effect.
“This has got everything to do with the regulations that the government came out with to stop indiscriminate price discounts, which were a big attraction for online sales. The regulations imposed by the government have levelled the playing field between online and offline retailers for pricing,” said Jaideep Mehta, managing director (India & South Asia) at IDC.
“Since the main attraction for online players was more flexibility and affordable prices, that advantage has gone.”
In the January-March quarter, online sales accounted for 35 per cent of smartphones sold in the country.
“Another online-only brand, Asus, for example, has tied up with us to sell its latest model. During the April-August period, our sales have gone up by more than 20 per cent year-on-year," added Chandra. Sangeetha operates 320 stores in the country. Smartphone sales accounted for nearly 49 per cent of goods sold online by e-commerce companies in the January-March quarter, according to a July 1 report by RedSeer Consulting, which tracks sales of online marketplaces. Chinese firms such as Lenovo, Xiaomi and Vivo, which had initially focused on selling online, are expanding offline and grabbing market share from Indian players such as Micromax.
The 17 per cent increase in sales was driven by aggressive push by Chinese mobile vendors such as Lenovo and Vivo, besides the entry of Reliance Jio with its sub-Rs 6,700 ($100) phones in the market, says IDC.
The total share of Chinese smartphone vendors went up to 27 per cent, from 21 per cent on a quarter-on-quarter basis, according to Counterpoint Research.
"Although some of the launches nowadays are done with an exclusive online partner, within a month, they are made available in the retail stores. This has become so common that consumers now know that within a few weeks, the handset will be available offline," said an industry executive, who did not want to be named. "Lowering of discounting rates by major e-commerce platforms in the country has also played a role in boosting the share of offline sales out of the total."
With festive season approaching, online share is likely to bounce back, with an array of new launches and offers, IDC researchers said.
"The premium segment above Rs 20,000 ($300-plus) saw vendor share movement rather than expansion as China-based vendors made a significant expansion in this segment, capturing one-third of this segment in Q2, 2016, from just nine per cent a year ago," said Jaipal Singh, market analyst (client devices) at IDC India. "Oppo's F1 Plus shipments grew further, helping the vendor to gain reasonable share in a global vendor dominated segment."
Apple was the biggest loser in the quarter, which saw sales of its flagship drop 35 per cent to 0.8 million units during the quarter ended June 30, halving the company's market share to two per cent, from four per cent in the previous year, Boston-based research firm Strategy Analytics said on August 6.
Apple iPhone SE failed to make any significant impact in the premium segment, while its previous generation iPhone 5S continued to contribute majority volume, IDC said on Friday.
Samsung continued to lead the Indian smartphone market, with a 25.1 per cent share, registering a 10.9 per cent sequential growth over the previous quarter and 15 per cent growth from the same period last year, followed by Micromax with a 19.9 per cent market share. Lenovo Group, Intex and Reliance Jio were the other three players in the top five smartphone vendor list, according to IDC.