Early trends indicate that smartphone sales are off to a slow start this festival season on e-commerce platforms like Amazon and Flipkart, with many consumers holding back on purchases.
Analysts attribute the lukewarm response to a lack of attractive offers on e-commerce platforms compared to last year, a general market slowdown with higher inventories, and the likelihood of delayed purchases by consumers who are anticipating better offers as sales progress throughout the month.
Besides, this time, better or equally good offers and discounts by mainline (offline) retailers are also seen as a strong competitor for Amazon’s Great Indian Festival Sales and Flipkart’s Big Billion Days, according to analysts.
Even as early trends suggest a slowdown, analysts expect sales to pick up, as there is still a full month until Diwali, during which e-commerce companies typically plan multiple sales.
The online festival season sales have started from September 26. Flipkart’s Big Billion Days sales will end on October 6 whereas that of Amazon’s will end on October 9.
“In the first few days of sales, we observed that smartphone sales growth has been slow compared to last year. This time consumers also do not have a fear of missing out (FOMO) great discount deals from online sales given that offline channels are giving equally good offers,” said Tarun Pathak, research director at Counterpoint India.
Faisal Kawoosa, chief analyst at Techarc agreed on the slow pick up in smartphone sales. “Both offline and online are not seeing that kind of traction as last year as per the early trends. We expect to see some activity from both brands and marketplaces to improve the sales.”
Counterpoint expects the smartphone sales volume from online channel sales to grow 3-4% year-on-year to 35 million units in the one-month festival season sales. On the other hand, offline channel sales volume is expected to increase 5-6%, according to Counterpoint. Analyst firm CyberMedia Research (CMR) expects 10% year-over-year growth in smartphone unit sales this festive season.
“Premium phones will continue to drive the festival season sales,” Pathak said, adding that a concrete trend in the sales performance will be visible in the third week of October.
The All India Mobile Retailers Association (AIMRA), which represents 150,000 mainline retailers across the country, expects smartphone sales volume to grow 15-25% month-on-month in the festive season and around 4% year-on-year.
“Despite the fact that many brands have exclusive deals with online channels, our retailers are giving better deals and offers compared to e-commerce companies which are running into huge losses. The e-commerce companies are only concerned with gross merchandise value (GMV),” said Kailash Lakhyani, founder and chairman of AIMRA.
Lately, AIMRA has also urged the government to check the unfair trade practices by smartphone companies by getting into exclusive sales deals with e-commerce companies. The practice leads to a lack of product access to local traders, deprives customers of bargaining rights, and limits competition and sales, AIMRA said.
Addressing concerns of mainline retailers, many brands such as Xiaomi, Vivo, Realme, among others, are offering good discounts, cashback, additional warranty, etc, on phones purchased from mainline retailers.
“Usually, October-December is seen as a good quarter for offline sales. Of the overall smartphone market, offline constitutes about 50-52%% of the share, and the channel will continue to do well,” said Navkender Singh, associate vice president at IDC India.
According to Singh, while online channels bring good value for the brands in terms of marketing and reach, they can’t ignore offline channels given users’ preference for retail stores.
In the April-June period, smartphone shipments to online channels grew by 8% YoY, whereas offline channel shipments declined by 2% YoY due to severe heatwave conditions in major parts of India, according to IDC data.
Amit Sharma, senior analyst – Industry Intelligence Group, CyberMedia Research (CMR), said, “offline channels remain essential, especially in tier 2 and tier 3 cities, where consumers appreciate the tactile experience of touching and feeling products. Many shoppers have long-standing relationships with local retailers and prefer in-store shopping, even when online deals are tempting.”
Kawoosa, however, also suggested that mainline retailers through AIMRA should indulge in combined marketing activity. Given intense competition from online channels, they will have to show value to the smartphone brands and move beyond advocacy and lobbying.
According to AIMRA, online sales numbers also include purchase by aggregators who sell phones in the grey market or export to other countries.
