Connect with us


Amazon India defies slump in sales, tier 2 cities upgrade to premium 5G phones

While overall smartphone shipments in India slowed down, e-commerce giant Amazon India recorded a 1.7-fold year-on-year (YoY) increase in sales of premium handsets in the first quarter of calendar year 2023. The performance rode on the coattails of skyrocketing 5G device sales and increasing demand from tier-2 and beyond markets.

The e-commerce firm has found success in this segment at a time when the smartphone market is seeing a new wave of ‘premiumisation’, as consumer preference shifts towards high-end devices.

“This growth is mainly being driven by upgrades,” Ranjit Babu, Director, Wireless and Home Entertainment, Amazon India, told Business Standard. “We are seeing a large number of customers upgrade their devices up multiple price segments, 5G being a huge growth driver,” he adds.

Smartphone shipments in the country fell 16 per cent YoY to 31 million units in the first quarter of calendar year 2023 to reach the lowest first-quarter shipments in four years, according to a report by International Data Corporation (IDC).

While overall shipments dwindled, Amazon’s smartphone business grew on a yearly basis. The firm posted a 30 per cent YoY growth in 2022, driven by the upgrade market, festive sales and rising demand for 5G devices. Moreover, premium devices have driven growth for the e-commerce firm.

“The premium segment has almost doubled year-on-year,” says Babu. “We did quite a lot of work in the market last year to increase affordability for customers. Through our partnerships with multiple banks, we are able to offer customers very attractive EMI offers. We have enabled exchanges as well.”

The premium smartphone segment has recently come to the fore due to a decline in entry-level devices. Low margins on lower-end devices have seen fewer vendors launch smartphones in this segment. Consequently, the selection of high-end devices has skyrocketed; OEMs would rather sell fewer units and earn higher revenue. The rising ASP for devices, which stood at an all-time high of $265 in Q1 CY2023, is also a contributing factor.

The 5G effect
Amazon, which launched its own 5G store, called 5th Gear, four months ago, is betting big on 5G device sales going forward. Through 5th Gear, Amazon offers customers a curated selection of 5G devices, educating them on the potential of these devices using video sessions hosted by experts.

“We are spending a lot of time and effort to build our 5G store, and are trying to help customers make informed decisions on 5G. We believe that the benefits that 5G brings to the table are still not entirely clear to customers. Our 5G store helps address that,” says Babu.

The share for 5G smartphone shipments in the country increased to 45 per cent in Q1 CY2023, up from 31 per cent in the year ago period, led by Samsung – which accounted for more than a quarter of the 5G smartphone shipments, IDC data signposts.

Currently, Samsung, OnePlus, Realme, Xiaomi and newcomer iQOO, are some of the top brands on Amazon.

“We’re very bullish on 5G. In the last quarter, over 50 per cent of smartphones sold on our platform were 5G devices. We’ve seen brands across the board listing wide selections of 5G phones across price segments,” says Babu. “Today, Amazon has the largest selection of 5G devices in India.”

The cost of 5G phones, he adds, are dropping with every passing quarter. With wider adoption, and a larger selection across brands, these price ranges are expected to go down further.

Tier-2+ focus
A lot of the demand for smartphones on Amazon, premium devices included, Babu says, is coming from tier 2 and beyond regions.

“Customers in tier 2 and beyond cities are now using more mid-range and premium devices. We are now seeing a much wider selection of devices available in these price segments – with a strong build quality, faster processors, AMOLED displays, and better batteries. Customers are, therefore, choosing to upgrade,” he reveals.

As much as 80 per cent of all Amazon’s smartphone orders are coming from these regions. “Three out of four customers that buy a smartphone on Amazon belong to a tier 2 and beyond town. This, we believe, is a huge growth driver for us going forward,” Babu says.

Amazon’s multiple language options, Babu claims, have further improved accessibility for this demand. “We now serve customers in 8 languages and we have seen quite some traction there, which has increased demand.”

Aside from the improved connectivity due to 5G, the increasing affordability, coupled with better processors, have also given a fillip to gaming device sales on the platform.

“With tier 2 and beyond consumers both creating and consuming content in the manner that they are today, gaming and content creation have been additional drivers for growth for us,” Babu says.

Going forward, Amazon’s is betting big on its 5G offerings. The firm’s focus will be on increasing its available selection of smartphones, improving delivery speed for devices to customers and making phones more affordable.

“We want to continue to make it easier for customers to upgrade to new phones across the price segments,” Babu says.

Over 50 per cent of smartphones sold in Q1 on Amazon were 5G devices.

Top smartphone brands on Amazon include Samsung, OnePlus, Realme, Xiaomi and iQOO. Business Standard

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!