On­line or Off­line, iPhone may Cost Same

As iPhone sales fall, Ap­ple moves to end price vari­a­tion in brick-and-mor­tar & ecom­merce mar­ket­places; move also aimed at re­or­gan­is­ing dis­tri­bu­tion ahead of the launch of its own stores in In­dia

The Economic Times - - Brands: Creating Desire - Wri­tankar.Mukher­jee @times­group.com

Kolkata: Variations in the prices of iPhones sold in brick-and-mor­tar stores and on­line mar­ket­places in In­dia may nar­row as dis­trib­u­tors move to a uni­form pric­ing struc­ture across the country.

The move was trig­gered by flag­ging off­line sales of iPhones and comes ahead of a pro­posed launch of Ap­ple’s own stores in the country, which is in­tended to be­come its pri­mary rev­enue driver, four se­nior trade part­ners of Ap­ple In­dia said.

“The poor sales of iPhone SE in In­dia have fur­ther ac­cel­er­ated the move of Ap­ple to push for uni­form pric­ing struc­ture. Even off­line sales of iPhones had taken a hit due to the huge on­line dis­count­ing, which Ap­ple head­quar­ters has not taken in good spirit and hence the com­pany now wants to cor­rect and bring about a com­mon pric­ing,” the chief ex­ec­u­tive of a lead­ing cell­phone re­tail chain said.

Ap­ple’s ri­val Sam­sung Elec­tron­ics was the first to move to uni­form pric­ing across off­line and on­line stores. This, ex­ec­u­tives said, also even­tu­ally helped Sam- sung to gain over­all share in the fiercely com­pet­i­tive In­dian smart­phone mar­ket.

Ap­ple has four dis­trib­u­tors in In­dia – In­gram Mi­cro, Red­ing­ton, Bee­tel-Bright­star and Rashi Pe­riph­er­als. Se­nior Ap­ple In­dia ex­ec­u­tives are said to have al­ready in­formed lead­ing re­tail­ers and trade part­ners about the move to bring back pric­ing par­ity for iPhones.

In re­sponse to ET’s query, Ap­ple said the com­pany does not con­trol prices and there has been no change in max­i­mum re­tail prices. “It is wholly in­cor­rect for your line of ques­tion­ing to as­sert that Ap­ple has com­mu­ni­cated any pric­ing change,” the com­pany said.

Most on­line re­sellers ob­tained a pric­ing ad­van­tage by pick­ing up iPhone stocks from mar­kets such as Hy­der­abad and Ben­galuru, where value added tax on mo­bile phones was lower at 5%, and sell­ing them in places in­clud­ing New Delhi and Mum­bai, where VAT is higher at 12.5-14.5%.

The e-sellers got a mar­gin ad­van­tage and could of­fer dis­counts, the ex­ec­u­tives said, lead­ing to a huge price dif­fer­ence be­tween brick-and-mor­tar chains and on­line mar­ket­places.

Ap­ple dis­trib­u­tors were also low­er­ing prices to­wards the end of a quar­ter when they were un­der pres­sure to meet tar­gets, a se­nior in­dus­try ex­ec­u­tive said. “This too should now stop since Ap­ple wants to bring back chan­nel hy­giene, since the way the dis­trib­u­tors were fluc­tu­at­ing prices the off­line re­tail­ers were scep­ti­cal about pick­ing up huge stock,” he said.

Ap­ple has ap­plied to open its own stores in In­dia and has sought ex­emp­tion from lo­cal sourc­ing norms. The com­pany also plans to di­rectly sell on­line. Chief Ex­ec­u­tive Tim Cook re­cently said Ap­ple is plac­ing long-term bets on In­dia. Sam­sung leads the In­dian smart­phone mar­ket and com­petes with Ap­ple in the pre­mium seg­ment, where de­vices cost up­wards of .₹ 30,000.

Dis­trib­u­tors were also dis­count­ing to­wards the end of a quar­ter when they were un­der pres­sure to meet tar­gets

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