 "Online smartphone sales drop in 2016 as launches dry up")
Sales of smartphones through the online channels have declined significantly in the first half of 2016. Data from the analyst firm Counterpoint Research shows, share of smartphones sold on the e-commerce channels have declined to 32% from 37% during the six months ended December as new launches drop 29% during during the period. While, in Jan-Jun 2015 857 new handsets were launched, the number went down to 606 this year.
There are multiple factors that have worked against the online avenues. Analysts tracking the industry say smartphone models launched exclusively for the e-commerce channel are on a decline in the past months. While in 2015, almost 150 new models were launched on the online channel, the number has come down to less than 40 in 2016.
Also, of late most of the online-only smartphone brands have ventured into the offline distribution and sales channels. Brands such as Honor from Huawei, YU from Micromax, Mi from Xiaomi and Le Eco – all have started selling their products through the brick and mortar stores in the country. Focusing on the online channel exclusively was the mood of the market in 2014 and first half of 2015 but by the end of April 2016, all major online-only brands had dropped the idea.
Chinese smartphone major Xiaomi, which entered Indian market in 2014 as an online smartphone brand, eventually went offline in 2015. Currently, it gets 10% of its sales from the physical retail outlets and aims to take that share up to 30 in next few years.
“Although some of the launches now a days are done in 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 week the handset will anyway be available offline, where may be the e-commerce site do not deliver the product," an industry executive said. Lowering of discounting rates by major e-commerce platforms in the country have also played a role in surging share of offline sales out of the total, he says.
“Also, increasing cases of delivery counterfeited and poor quality products has raised concerns among consumers about the credibility of the online channel," the executive added. Consumer complaints related on delivery of already used products have come to the fore in recent times. Unlike offline stores, consumers do not get to check the products in online channel.
Data shows that the total number of launches in below-Rs 10,000 price band has declined sharply in the first half of 2016 on a year-on-year basis. The segment comprises almost 75% of the volume sales for smartphone in the country. While in Jan-Jun 2015 775 new phones where launched, a year later the number has some down to 527.
However, as festive season approaches, sales are expected in the online channels and form up to 40% of the total sales, analyst Tarun Pathak from Counterpoint says. As buying on the e-commerce platform continues to become easier with integration of all customer information and targeted advertisements go up on the social media, online channels are expected to recover soon from this ongoing slump.