The lure of e-commerce has prompted smartphone rivals Apple and Samsung to take contrasting yet concrete steps for the first time in India. Industry experts say the moves not only emphasize the importance of online retailing for both companies but will also lead to greater pricing parity with the offline trade.
Samsung has agreed with Amazon and Snapdeal to set up a ‘brand store’ on their websites, where only sellers authorized by the Korean company can offer its products at prices mandated by the company, preventing predatory discounting, three senior executives with the cellphone trade said. Unauthorized sellers henceforth won’t be able to offer Samsung products on these websites.
Apple, on the other hand, is allowing retailers to buy its devices from any of its four distributors in the country — Ingram Micro, Redington, Rashi Peripherals and Brightstar. Earlier, retailers could buy only from designated distributors. The change came after several complaints from offline retailers that online sellers were getting phones from Apple’s designated distributors at lower prices. Apple India officials have informed its offline retailers that they are free to negotiate margins with distributors and can sell at a lower price, matching online if they want, the executives said.
“Even though all such communication by Apple India officials to retailers is done verbally, the big chains are already buying from distributors who offer best price,” one of the executives said. These are the first concrete steps by Apple and Samsung to tap the burgeoning ecommerce market in India by working on their traditional distribution lines, market tracker Counterpoint Research senior analyst Tarun Pathak said.
“Both the brands were losing sales to online-only smartphone brands at a time when e-commerce already contributes 15% of smartphone sales in India and expected to double this year,” Pathak said. Some 115 million smartphones are expected to be sold in India this year. The CEO of a leading cellphone retail chain said Apple has adopted a push-back mechanism to sway offline retailers which complained about pricing disparity with ecommerce, signaling that the company is serious about not curbing online sales in any way. “Apple is not that fussy about online discounting in India as it used to be,” he said.
Talking about Samsung’s initiative, another senior executive with an electronics chain said after blacklisting online sellers that were not maintaining its pricing, Samsung’s latest move will allow it to tap online shoppers without disturbing offline retailers and also give a legitimate stamp to handsets sold through Amazon and Snapdeal.
As per industry officials, Samsung is also in talks with Flipkart to set up a similar online brand store which may be expanded with other e-commerce firms.
A Samsung India spokesperson said all channel partners contribute to its market share growth and the company regularly monitors developments in both the online and offline retail spaces.
“Samsung will be where its consumers are. We will continue to grow our extensive dealer network and be close to our consumers,” the spokesperson said. Snapdeal refused to comment on the association with Samsung.
An Amazon India spokesperson said the Samsung store is a brand experience page and merchandising initiative whereby it showcases the breadth of Samsung’s selection. “Through such initiatives, we partner with brands to engage with their and our customers,” the spokesperson said.
