Over 5,000-6,000 mobile phone retailers, largely in Maharashtra, on Monday asked Samsung to settle their claims worth over Rs 50 crore, which have been pending since last year.
The pending claims raised to Samsung by the retailers include payments of margins as well as certain schemes offered by the smartphone company for which it has asked retailers to give discounts to consumers.
The company offers 8-10% margins to retailers for selling its smartphones.
The pending payment by Samsung pertains to the January-March quarter of last year, which in a way is affecting the financial position of retailers, they said.
“These retailers are crucial partners to the success of Samsung in the region, and their concerns must be addressed promptly,” the All India Mobile Phone Retailers Association (AIMRA), said in an email to Raju Pullan, senior vice president of mobile business at Samsung India.
The retailers are planning a demonstration in front of the company office if the company fails to settle the claims, according to AIMRA executives.
“We have had multiple meetings with Samsung executives, everytime they assure that they are settling the payment but it’s been over a year. This is unacceptable,” said Ajit Jagtap, Maharashtra region president of AIMRA.
Simply put, if a phone is priced at Rs 40,000, Samsung asks the retailers to sell it at Rs 30,000 in a bid to offer discounts to consumers. This Rs 10,000 balance, Samsung is supposed to reimburse to retailers and settle it via credit notes over 45 days.
The settlement is usually not a direct reimbursement of cash but adjustments in the dues retailers owe to the smartphone company.
Offline retailers also claim that the company settles the account in real time when discounts are offered to online retailers.
According to industry executives, the issue between Samsung and retailers is due to the changes in distributors by the company, especially in the Maharashtra region, last year.
According to Counterpoint, with an 18% share, Samsung took the top spot in 2023, for the first time since 2017. The company’s performance was driven by aggressive marketing in offline, and focussed approach in the premium segment.
Owing to weakness in the overall market, Samsung’s smartphone shipments to dealers and retailers fell 5% y-o-y in 2023.
AIMRA said this is not the first time the association has written to Samsung on settling the payments.
“Pending claims are the complete responsibility of Samsung as all scheme letters received to retailers are from Samsung and not by any distributor,” AIMRA had said in an earlier communication to Samsung.
AIMRA represents over 150,000 mobile phone retailers across the country.
According to analysts, smartphone companies have been focusing on offline channels to grow their sales. Currently, offline channels constitutes 55% share of the market driven by consumers’ preference for the ‘look and feel’ of the device, according to Counterpoint.