Chinese Offline Focus Dents Online Smartphone Sales

Mumbai: Smartphone sales online dropped during the first half of 2016 when compared to growing offline sales owing to the increased offline focus of Chinese entrants. The number of online-only launches is also declining of late. More particularly the offline focus of Chinese entrants led to a drop in online’s share in the first half of 2016.

Sale of smartphones on the e-commerce channels have declined 29 percent during the January-June period to 60.6 million units, when compared to the preceding six months when 85.7 million handsets were sold, according to Counterpoint Research.

Sale of smartphones on the e-commerce channels have declined 29 percent during the January-June period to 60.6 million units, when compared to the preceding six months when 85.7 million handsets were sold, according to Counterpoint Research.

Several factors are influencing the smart phone sales online. Industry observers say smartphone models launched exclusively for the e-commerce channel are declining during the past few 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. Another major factor is that lowering of discounting rates by major e-commerce platforms in the country.

“As festive season approaches, sales are expected in the online channels and form up to 40 percent 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.

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 percent 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.

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 percent 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.

Navkendar Singh, senior research manager at International Data Corporation’s (IDC), said: “A surge in offline sales as per the firm’s preliminary analysis of the quarter ended June 2016. The trend to continue as vendors realise the importance of setting up robust offline distribution network.” However, IDC is yet to officially release its data for the quarter.

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 entered Indian market in 2014 as an online smartphone brand, Eventually it went offline in 2015. Now, offline sales account for 10 percent of the total sales. Xiaomi aims to take offline share up to 30 percent shortly.