Online Phone Sellers Ring Offline Tune
Policy changes capping discounts are forcing several brands to have store presence
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.