Of late, many mobile brands have adopted the online-only sales strategy and results indicate consumers have taken a liking to this approach.
In India, the online-only strategy was first embraced by Motorola in partnership with Flipkart. Its MotoG sold out within 15 minutes of opening sales. Xiaomi and OnePlus, too, followed a similar strategy.
One reason for the model’s success is the reach of an online platform like Flipkart. Through online, brands are able to reach consumers in small cities, thus, giving them visibility in Tier-1 and Tier-2 cities from day one.
Another factor that helped is that with time, consumers have grown more comfortable with online buying, as they are now well-informed.
Consumer awareness and improved online buying experiences have also led mobile brands into believing that offline buying is overrated. Buyers now compare several models before placing an order, and online purchase fits this well. Thanks to price comparison sites buyers can zero in on a choice easily.
Perhaps the most important reason why brands like Xiaomi, OnePlus, and even new entrants like InFocus are using an online-only strategy is that this allows them to control the pricing strategy of their products, bypassing the cumbersome distributor-retailer cycle.
This cycle gets further complicated for a foreign brand looking to make inroads into India. In a market that changes every few months and has an incredible number of competitors, building one’s own distribution network is a big hassle most foreign brands would avoid. The other option for these brands is to opt for a national distributor and through it to dealers and retailers. This pushes the device’s price up. If you find Xiaomi’s Mi4 16 GB version attractive below R20,000, consider adding another R3,000-5,000 to that, and its price attraction is gone. That’s what the distributor-retailer cycle can do to the price of a device.
Motorola’s online-only strategy for the various versions of the Moto G and later the Moto E sold more than a million devices. Xiaomi followed suit with Mi3, Mi4, and Redmi 1s devices, and is now now among the top 3 smartphone brands in the world after Apple and Samsung.Micromax-owned Yu Tele-ventures (Yureka), Lenovo, Lava (Xolo) and Vivo too have adopted this model.
While the online-only strategy may have many ups, it offers no immediate reasons for bigger players to join it. Huge brands like Apple aren’t likely to switch to this channel. Apple’s sales are built on brand value and people standing in queue to buy its products. Apple’s marketing makes the brand desirable.
The growing internet penetration is allowing e-commerce brands to reach a critical mass of customers, and in time, as more mobile brands opt for an online-only strategy, e-tailing would begin to rival traditional sales channels.
The author is founder and director, iSpyPrice.com, a price comparison site