festive season widens offline online rift on smartphones

Holiday Season Widens Rift Online On Smartphones, Telecom News, ET Telecom

The holiday season widens the online rift on smartphones

NEW DELHI: In this festive season, the rift between online channels and offline retail stores has worsened as brick-and-mortar stores have blamed e-commerce portals for controlling the majority of sales through differential pricing, exclusive deals and discounts.

Online channels accounted for 58% of smartphone sales in the third quarter of the calendar year that includes the festive season, according to an IDC India report. IDC added that while growth in the online channel remained flat, sales in the offline segment were down 20% year-over-year due to lower demand and strong pricing on e-commerce platforms.

Another report by Strategy Analytics says that three major brands lean towards e-commerce stores as the majority of their sales occurred to support IDC’s findings.

“Retailers in the offline segment have successfully beaten the festive season on premium quality smartphone sales as discounts were not as big in online channels. A key role in keeping brick-and-mortar stores alive has been the key to keeping brick-and-mortar stores alive,” said Navneet Pathak, Secretary. The year of the All India Mobile Retailers Association, the requirement for GST input credit, which was not available in online channels.

Pathak said that the introduction of GST on a high-value product significantly reduces acquisition cost, and encourages customers to buy from offline stores.

However, online channels offered deep discounts to compete and win over customers, alleged offline players ET spoke to. For example, the premium device launched in 2020 and with an MRP of nearly Rs 60,000 was available on the e-commerce platform during the festive season selling for under Rs 39,000. Moreover, there were additional exchange offers besides bank financing.

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South Korean mobile phone maker Samsung’s shipments fell 0.8% year-on-year in the third quarter. By contrast, Chinese brands Vivo (-19.5%), Realme (-18.1%) and Xiaomi (-18%) posted the sharpest declines, while Oppo was the only brand to report 6.1% year-on-year growth in this quarter. IDC data showed.

Offline retailers also claimed that they did not receive sufficient stocks of the latest ultra-high-end phones. Unlike some older models, according to data shared by AIMRA, the Realme 9 5G, for example, was selling on online platforms at a spread of Rs 3,960. The company offered a discount of 4% on the invoice at a margin of Rs 640 to the retailer on sale of the product. However, on the online channels, the Realme 9 5G was selling at a discount of Rs 11,399, which is much lower than the purchase price from the distributors.
Realme did not respond to ET’s email query.

For retailers, margins fall further on account of MDR (merchant discount rate) fees for credit and debit card purchases, which Pathak said account for nearly 40% of all purchases in offline stores. He added that some brands increased profit margins during the holiday season, but that was offset by strong sales targets that were not always achievable in some regions.