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
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