On­line Phone Sell­ers Ring Off­line Tune

Pol­icy changes cap­ping dis­counts are forc­ing sev­eral brands to have store pres­ence

The Economic Times - - Front Page - Wri­tankar.Mukher­jee@ times­group.com

Kolkata: On­line ex­clu­sive smart­phone brands such as Xiaomi, OnePlus, LeEco, Mo­torola and InFocus are ac­cel­er­at­ing plans to cre­ate sig­nif­i­cant off­line pres­ence amidst con­cerns that ecom­merce reg­u­la­tions may hit on­line smart­phone busi­ness due to curbs on dis­counts.

Four in­dus­try ex­ec­u­tives said on­line ex­clu­sive brands are also toy­ing with the idea of ap­point­ing their own on­line re­sellers or — in the case of brands with man­u­fac­tur­ing fa­cil­ity in In­dia — even set­ting up their own ecom­merce stores, which the reg­u­la­tions cur­rently al­low, in­stead of go­ing through sell­ers ap­pointed by ecom­merce mar­ket­places.

Chi­nese brand LeEco plans to set up 4-5 flag­ship ex­pe­ri­ence stores and 100 ex­clu­sive out­lets be­sides sell­ing through multi­brand out­lets and set­ting up its own ecom­merce site in In­dia, in­dus­try in­sid­ers said. The brand plans to launch off­line ex­clu­sive mod­els to grow the chan­nel and start lo­cal man­u­fac­tur­ing in In­dia.

InFocus wants to more than dou­ble its ex­ist­ing off­line store pres­ence in three months and is in­vest­ing on mak­ing pres­ence felt inside the stores.

Xiaomi and Mo­torola have been pi­lot­ing off­line pres­ence in cer­tain mar­kets and now want to scale it up, ex­ec­u­tives said. Pop­u­lar smart­phone startup OnePlus said while it will con­tinue its ex­clu­sive as­so­ci­a­tion with Ama­zon In­dia for sales, it will set up ex­pe­ri­ence cen­tres in seven cities.

At OnePlus ex­pe­ri­ence cen­tres, hand­sets could be booked through Ama­zon af­ter the con­sumer has ex­pe­ri­enced the prod­uct and it will be de­liv­ered in about an hour.

Brick-and-mor­tar cell­phone re­tail lobby All In­dia Mo­bile Re­tail­ers As­so­ci­a­tion’s pres­i­dent Arvin­der Khu­rana said the on­line ex­clu­sive brands are show­ing gen­uine in­ter­est to fo­cus on phys­i­cal dis­tri­bu­tion and cre­at­ing off­line chan­nel loy­alty. “We ex­pect the smart­phone sales ac­tion will get back to off­line busi­ness due to the ecom­merce reg­u­la­tions,” he said.

LeEco In­dia’s chief op­er­at­ing of­fi­cer for smart elec­tron­ics busi­ness Atul Jain said the brand will foray into off­line in next 2-3 months. “The is­sue with ecom­merce reg­u­la­tion is for the ecom­merce firms to han­dle and we have no role. On­line has an in­her­ent ad­van­tage as cost to reach con­sumers is lower which brands can pass on to con­sumers, but the chan­nel will not dis­count the prod­uct,” he said. Amer­i­can brand InFocus’ coun­try head for In­dia Sachin Tha­par said the po­ten­tial is higher in off­line, with the re­cent ecom­merce reg­u­la­tions adding fuel to it. While the brand has al­ready made it­self avail­able in about 5,000 out­lets in last six months, now it wants to reach another 7,000 out­lets in three months. InFocus has also ap­pointed in­store sales pro­mot­ers and re­tail sig­nages like Sam­sung and Ap­ple.

The chief of an on­line ex­clu­sive smart­phone maker said the brand will con­tinue dis­count­ing on­line them­selves and will have sim­i­lar ag­gres­sive pric­ing strat­egy off­line as well.

“While on­line we have a mar­gin ad- van­tage, for off­line we will route the prod­ucts from low value-added tax (VAT) mar­kets like Hy­der­abad and Bengaluru which will act as hub na­tion­ally so that we can con­tinue sim­i­lar pric­ing,” he said, re­quest­ing anonymity. VAT on mo­bile phones in Hy­der­abad and Bengaluru is 5%, while in most of the other mar­kets across the coun­try, it is around 12.5-14.5%.

OnePlus gen­eral man­ager for In­dia busi­ness Vikas Agar­wal said the com­pany will con­tinue with on­line sales since the sav­ings on dis­tri­bu­tion al­lows it to price the prod­ucts ag­gres­sively, but will cre­ate a phys­i­cal re­tail in­fra­struc­ture since a lot of con­sumers want a touch and feel ex­pe­ri­ence and buy it off­line. Chi­nese brands like Oppo and Vivo are mostly off­line fo­cused.

Emails sent to Len­ovo-Mo­torola and Xiaomi did not elicit any re­sponse as of press time on Thurs­day.

As per es­ti­mates by Coun­ter­point Re­search, one in three smart­phones sold in In­dia are through ecom­merce plat­forms. The re­searcher said while Len­ovo (in­clud­ing Mo­torola) was the big­gest ben­e­fi­ciary of this trend cap­tur­ing 25% share of smart­phone sales through ecom­merce, new en­trants such as the Chi­nese brands to­gether cap­tured al­most half of the on­line sales seg­ment.



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