Riding The Wave Of Online Sales, Smartphone Shipments Continue To Surge

Despite country-wide agitations by traders against the alleged unfair practices by e-commerce giants, shipments of smartphones continue to surge — riding on the astounding growth in online sales.

Amid the protests against leading e-commerce firms, Flipkart and Amazon, shipments through the online route in fact witnessed a double-digit growth every quarter. Data from analyst firms like IDC India and Counterpoint Research show that shipments through the online channel grew by a whopping 28.3 percent year-on-year (YoY) in the quarter ended September.

This has taken share of the online channel in the overall sales to an all-time high of 45.4 percent. In the previous quarter, shipments through the channel had surged 26 percent YoY. This comes at a time, when shipments in the traditional brick and mortar stores are shrinking. While, in the June quarter, shipments through offline channel dipped by four percent, in September, the fall was at 2.6 percent YoY. Consequently, the share of offline stores, which used to hold over 75 percent of the market three years ago, has now fallen to less than 55 percent. This has provided wind to the agitation that traders have launched against the e-commerce giants in the country.

The Confederation of All-India Traders (CAIT), which represents 70 million traders, has leveled serious allegations against e-commerce players – starting from fraudulent business practices by manipulating inventory, bypassing the FDI policy to offering predatory pricing. It further launched a country-wide agitation that includes more than 40,000 trade associations, including the All-India Mobile Retailers’ Association.

In fact, CAIT has made several representations to the commerce minister against Flipkart in the past few months. Citing its balance sheet, the retailers alleged huge revenue losses to the exchequer caused by the onlines firm.

Flipkart, which is at the centre of a controversy, now sells every six out of 10 smartphones sold online in India. Data shows that it has traditionally been stronger in the consumer technology segment.

In the September quarter, Flipkart’s share in the online smartphone space rose to an all-time high of 58 per cent — from 53 percent a quarter ago. The second largest player, Amazon, however, lost share — to 29 percent in September from 36 percent the June quarter.

Mega shopping events like Flipkart Big Billion Day sale and Amazon Prime Day that offer special discounts, cashback schemes and easier consumer finance options — remain unmatched by offline traders. “The growth and maturity of online channels that serve more pincodes than ever, coupled with greater customer service, attractive promotions from discounts to cashbacks and EMI (equated monthly instalment) were pivotal in driving smartphone sales,” said Anshika Jain, research analyst at Counterpoint.

Smartphone players that have been stronger in the online channel have gained further momentum in the recent quarter. Xiaomi, the current market leader, had begun its journey here as an online-only brand. While it has expanded its offline reach significantly in recent times, it continues to lead the online channel with over 40 percent share. Its peers, Vivo and Oppo, which ride on the online boom also, have gained significant market share in recent quarters. The two brands have grown their shipments in September by 59 percent and 92 percent, respectively, compared to the previous month.

According to Navkendar Singh, research director at IDC India, the unabated aggression by online players will continue to be a challenge for offline retail, which is still the largest channel for smartphones in India.―Business Standard