Smartphone sales pick up pace online
E-commerce firms introduced exclusive smartphones and held sale events, which led to a revival of growth in online retail in August
Latest News »
- Zakir Musa is the face of Al Qaeda’s Kashmir terrorist outfit: Report
- No plans to make Aadhaar mandatory for air tickets: Govt to MPs
- NCLT reserves order in insolvency case against ABG Shipyard
- BSNL asks internet users to change default password after malware attack
- Very much hope Vishal Sikka will deliver results, says Infosys’ Ravi Venkatesan
Bengaluru: Online sales of smartphones, the single largest product category in online retail, finally picked up in August after declining for two successive quarters when e-commerce firms pulled back on discounts and advertising, prompting shoppers to buy phones in stores.
Mobile phones and tablets accounted for about 55% of the gross sales of e-commerce firms in the quarter to December 2015. The proportion dipped to about 48% in the quarter to March, before picking up slightly to about 50% in the quarter to June, according research firm RedSeer Consulting.
In August, e-commerce firms led by Flipkart introduced exclusive smartphone models, organized sale events and registered increases in smartphone sales, which in turn drove a revival of growth in online retail, executives at e-commerce firms said.
Flipkart introduced smartphone models by Xiaomi and Lenovo, both of which sold out and helped the marketplace record an increase in its monthly sales after months of declining revenues. The Moto G4 Plus and OnePlus 3 smartphones, which are exclusive to Amazon, also saw strong demand.
Online retailers are in a rush to sign tie-ups with Chinese smartphone vendors before the festive season.
Flipkart has signed up Motorola’s Moto E3 Power phone on an exclusive basis and is aggressively pushing for exclusive tie-ups with top smartphone brands ahead of its flagship Big Billion Day in October, according to two company executives who requested anonymity.
“Flipkart enjoys an undisputed dominance in the online smartphones market, the share of which has only grown in the last few years. Further, share of online sales of smartphones has increased by 2% in the last quarter as compared to last December as per our estimates. We believe in expanding the market with initiatives meant to meet aspirations of Indians in every category. We will be going big in making quality products affordable to as many consumers as possible. While we cannot disclose the details of the 2016 edition of Big Billion Day, we will offer deals which customers have not experienced before. Our specially designed consumer programmes such as no-cost EMI (equated monthly instalments) and product exchange will enable customers to buy a lot more with a smaller budget this festive season,” said Ajay Yadav, vice-president, mobiles, at Flipkart.
“Smartphones account for the largest share of gross merchandise value (GMV). If you take out mobile phones, the average order value drops drastically,” said Anil Kumar, chief executive, RedSeer Consulting.
Partnerships between brands and e-commerce firms lead to higher customer satisfaction, better odds of product success and lower costs per unit, said Tony Navin, vice-president, partnerships and strategic initiatives at Snapdeal.
Brands such as Motorola and Xiaomi, which were available exclusively on Flipkart in 2014, now tie-up with Amazon and Snapdeal as well.
According to Noor Patel, director, category management at Amazon India, phone sales grew five times in the past one year. It has forged 57 partnerships with OnePlus, Motorola, Lenovo, Xiaomi and Samsung.
While smartphone sales have driven growth in online retail since 2014, an offline push by Chinese brands Xiaomi, Oppo and Vivo has hit sales of online retailers this year. According to Counterpoint’s Market Monitor service, brands that grew significantly during the quarter were Chinese. While Vivo grew 759% from last year, Oppo clocked 183% growth and Xiaomi grew 35%.
Vivo does not have any online presence in India. Currently, it sells through about 10,000 retail stores.
“We are not completely ruling out the possibility of focusing on online sales. However, our decision to go online has not yet reached the implementation stage,” said Vivek Zhang, chief marketing officer, Vivo India.
Rival Oppo has a skeletal online presence through its tie-up with Amazon in August. It is aiming at opening 35,000 offline stores by year end. “Offline presence is necessary as it raises and captures consumer’s trust as they can experience the product physically and then decide on making a purchase. Online buying and selling being a growing trend, within the next two-three years, we will be investing more in online channels. We are looking at other channels like Flipkart to tie up with,” said Sky Li, global vice-president and managing director of international mobile business and president of Oppo India.