Indian Government Bans Smartphone Online Exclusive Sales

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Indian Government Bans Smartphone Online Exclusive Sales

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India is a largely online buyer’s market and many phone manufacturers have switched to selling online instead of investing in brick and mortar stores. Samsung has been in the number one position in terms of smartphone sales worldwide for quite some time now. But Xiaomi had taken the lead in the first quarter of 2018 in terms of India smartphone shipments market share. But now, it seems like Samsung will get a leg up in this battle with a new law that has been introduced by the government banning exclusive deals of phone manufacturers with online marketplaces.

What Exactly Happened?

Most manufacturers these days such as Xiaomi, Oppo, Vivo and even OnePlus use these exclusive launches with one of the E-commerce players to promote their phones and drive sales. The new law will bring the websites including Amazon and Flipkart to a level playing field. The government also directed that a single vendor can sell a maximum of 25% of its inventory on an e-commerce platform. This is where Samsung’s brick and mortar stores come in. Since the Chinese manufacturers heavily depend on online sales which help them keep their phone prices down, we can expect a surge in prices of these phones in future. We can also expect phones being sold out quicker. A black marketing of phones due to their unavailability can also be a cause for concern. Xiaomi and OnePlus has already started opening their own storefronts in several locations in India. But they are not nearly enough to compete with Samsung.

According to Counterpoint, about two years ago, 5% of Xiaomi’s volumes came from offline channels which has grown to around 30%. This can largely be attributed to them opening their own stores and selling through other affiliate stores as well. Xiaomi has around  500 Mi stores at the moment while Samsung has around 2100 stores in the country. This also means that Indian manufacturers who completely missed out on the online selling bandwagon might just regain their footing in the business. OnePlus had also said in March 2018 that they will expand their offline selling stores, which they call ‘experience zone’. Their plans included 10 cities which also include Delhi, Mumbai, Chennai and others.

It is also important to note that the offline segment witnessed an annual growth of 6.6 per cent in Q3 2018 but still online channels continued to dominate with around 60 per cent of the Indian smartphone market in that quarter.

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Souradeep Roy
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