At a time when about 35-40% of the smartphone sales in the country is happening through easy financing schemes, Amazon India is looking to boost the take up of its in-house Pay Later service through better offers in the current year.
The same assumes significance in the sense that the premium smartphone segment (above Rs 30,000) has been seeing a strong growth atleast in terms of value. Since a significant portion of the sales happen on equated monthly installments (EMIs) via credit or debit cards, Amazon is looking to give better EMI offers to its users without a credit card, while also looking to capture a major share of the buy now pay later market.
Amazon Pay Later service was launched in India in 2020. With regard to the smartphones, the company has not seen much traction on the service from the consumers in 2023.
“We haven’t focused on it last year, so it (percentage of smartphone sales via Pay Later) is still in single digits. Today, you will see a lot more offers available on Amazon Pay Later than ever” Ranjit Babu, director, smartphones and televisions at Amazon India, told FE.
“From a customer standpoint, it’s so easy to use it. With Pay Later we want to drive a friction free experience for users. Buying a phone in like two minutes, three minutes flat is something that will drive more customers to come to Amazon Pay Later,” Babu added.
As one of the options, the company is offering better terms for no-cost EMIs compared to other bank offers.
In the year gone by, the premium segment drove the overall smartphone business for Amazon India. Even as the overall smartphone sales in volume terms were flat, the company witnessed over 40% growth in the premium smartphones segment in value terms. While the company did not share specific details, Amazon India’s smartphone business grew in high double digits in value terms in 2023.
“It’s the first time we’ve seen growth go to that extent. The growth was largely driven by customers upgrading and one important indicator that we found interesting was a higher number of consumers using EMIs to purchase phones,” Babu said.
According to Babu, the premiumisation trend in the country will stay since India as a market is in early stages compared to other developed markets. “With more and more phones coming into that segment and tech becoming more affordable, we see a lot more customers choosing to upgrade,” Babu said, adding that the company would see more growth in the premium smartphone segment this year compared to 2023.
According to Counterpoint, India’s smartphone shipments remained flat in 2023 at 152 million units. This was due to macroeconomic turbulence leading to low demand and an inventory build-up in the first half last year.
The premium segment witnessed a 64% YoY growth in 2023 driven by easy financing schemes, which resulted in consumers jumping price bands to purchase higher-priced smartphones.
“Over 70% of phones that we sold last year came outside tier-1. We are seeing customer penetration coming from cities where we did not see significant activity in mobile phones,” Babu said, the company’s focusing on penetrating deep on the market by giving affordability and more selection to users.
Similarly, 5G phones accounted for over 70% of Amazon India’s smartphone sales last year. The company expects the 5G phones to be more affordable this year.
According to IDC, shipments to online channels dropped by 6% and its share dropped to 49% in 2023 from 53% in 2022. On the other hand, offline channel shipments grew by 8% YoY as vendors strengthened their retail presence with lucrative premium offerings as well as an expansion into smaller towns and cities.
When asked about the fall in shipments to online channels, Babu said, “That’s not how we look at it. The way we look at things is where are our customers, what are the problems we are solving, and are we doing the right things?”
“There are multiple benefits that Amazon offers to a customer. For example, the width of bank offers that we are able to provide today when somebody wants to buy a smartphone, could potentially be very difficult for customers to get it in other channels,” Babu added.
Besides financing and affordability, in the current year, Amazon India is looking to improve the live shopping experience for consumers, focusing on faster delivery, and helping consumers to make informed decisions, Babu said.
