Mobile retailers say Samsung’s online-focused strategy fuels smartphone grey market, bat for level playing field: Report

India's cellphone retailers' association reportedly criticised Samsung for favouring e-commerce giants like Amazon and Flipkart by giving them better access to discounts. The retailers alleged that the Korean electronics maker's policies are fuelling a grey market-like situation in the smartphone segment, driving losses for retailers, reported Moneycontrol on Tuesday, September 2, citing a letter from the All India Mobile Retailers Association (AIMRA).

The retailers' association has sent two letters to Choi Soon, EVP at Samsung India, asking for an even playing field, especially during the upcoming Diwali season. According to the report, Diwali is a time for people to make bigger purchases.

“These platforms often receive preferential treatment concerning supplies and promotional support, especially when they are backed by brand support like Samsung,” reported the news portal, quoting Kailash Lakhyani, founder and chairman of AIMRA. He also said that Amazon and Flipkart's aggressive sales campaigns are disrupting the traditional retail business landscape.

The letter to Samsung comes at a time when the company is facing its worst sales decline in a decade which has led to a fall in value market share as the industry faces fierce competition from Chinese smartphone companies like Xiaomi and Vivo, as per the report.

The letter also highlighted Samsung's fall in market share in the Indian market, which is now at 15 per cent, compared to 50 per cent earlier, according to the report.

“…this decline is largely due to the diminishing focus on retail channels, historically the backbone of Samsung's success,” said Navneet Pathak, national joint general secretary at AIMRA, as per the report.

Rise of illegal sales:

The retailers' association also alleged that the exclusive launch of the Samsung M35 on Amazon has led to a large number of phones being sold illegally in the country.

“This launch, with no visibility in the retail channels, has yet again shaken the faith of retailers who have been steadfast supporters of Samsung's product lines. While we are offered other M and F series products, the decision to exclude the latest launch from retail channels raises significant concerns about the brand's intent,” said Pathak, as per the report.

Samsung did not get back to Moneycontrol's queries about the development.

AIMRA claimed that the Korean electronics maker is trying to use multiple channels at the same time, like Amazon, Flipkart, retail chains, large-format stores and the grey market. This is causing a complete imbalance that is increasingly difficult to manage, according to the report.