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Tier-II & Tier III cities led the charge in smartphone sales with a growth of 23.3% over previous month largely due to vendors focusing on new affordable launches, higher spending on marketing and innovative payment options during the festive month of October 2016.
According to International Data Corporation’s (IDC) monthly city level smartphone tracker, the leading 30 cities in India registered growth of 20.4% in Q3 2016 against Q2 2016.
According to Upasana Joshi, Senior Market Analyst, IDC India, “The key four months from July to October 2016 made up more than 40% of the annual smartphone sales. The festive season in India starting in August with Independence Day till Diwali in October, drove the consumer buying across all markets. Multiple sales by all major e-commerce players in October with their high-decibel marketing, attractive payment options, and exchange offers also helped in growing the market.”
The top 8 to 10 cities in India constitute the major portion of online sales, leaving a yawning gap between these markets and the still largely untapped smaller towns. Consumers from Tier 3 & 4 cities who had been averse to online buying in the past, showed significant interest in the online festive sales this year.
China-based players contributed significantly to the growth at the offline retail counters while continuing to dominate the online channel. “It was almost like a “Chinese Smartphone Diwali” across all city tiers. These vendors collectively accounted for more than 40% market share in the top 30 cities during Diwali month, primarily driven by 4G enabled handsets. Oppo & Vivo continue to shake the traditional line up of Indian vendors with their superior build quality, massive marketing investments in the offline channel.” adds Joshi.
In the premium smartphone segment of $300 and above, Apple grew further with help of the newly launched iPhone 7 series and the already hit series of iPhone 5s and 6. The Samsung Galaxy S7 Edge continues to pull major demand, in addition to the series of new model launches by Samsung across both offline and online channels.
“While this festival season was one of the best for offline channel, ecommerce players have also started investing more on sellers in smaller cities, better model a & improving delivery network, moving away from deeper discounts. Previously offline only or online only vendors have now started drawing benefits from their multi-channel strategies, acknowledging that offline and online channels can coexist in the market without necessarily posing a threat to each other,” says Varun Singh, Market Analyst, IDC India.
Among vendors, Samsung continued to hold on to its top position with a market share of 26.1% in the top 30 cities. With a series of newly launched models namely J5 Prime & J7 Prime, Samsung clocked 15.8% growth in Oct 2016 over the previous month.
Lenovo (including Motorola), with 13.4% share, grew significantly in Oct 2016 by approximately 50% over the previous month. The newly launched Moto E3 Power and existing Moto G4 series along with Lenovo K5 series accounted for more than 70% of volumes.
Xiaomi's, with 10.7% share, growth jumped by 41.7% in Oct 2016 over the previous month on the back of its hit model Redmi Note 3 and newly launched Redmi 3s & 3s Prime.
Indian players Micromax and Intex continued to see their share dip. Micromax share dipped to 6.8% in Oct 2016 with a de-growth of -16.7% over the previous month. “It is facing huge pressure from other local vendors in below $100 segment & with Chinese vendors in below $150 segment. The channel is still carrying some of the older models which are slowly getting liquidated,” said IDC.
Intex’ share dipped to 5.3% in Oct 2016 with a stagnant growth over the previous month. It still continues to command significant share in below $100 price segment, however, it faces competition from Lava & Lyf devices within this segment.
Demonetisation impact
“We feel that the demonetisation process, currently underway, will lead to a significant but temporary contraction in the mobile phone market in Q4 2016. Due to relatively slower sales, the inventory in channel is piling up which will take some time to be liquidated as the currency situation improves,” says Navkendar Singh, Senior Research Manager, IDC India.
