Smartphones were tipped as a key driver for online retailers Flipkart and Amazon in India during 2017 – provided the companies can overcome consumers’ preference for bricks and mortar stores.
Counterpoint Research analysts said Flipkart and Amazon could pull off a double whammy by offering heavy discounts on smartphones, overcoming stagnation in online sales of the devices and boosting their own revenues in the process, ET Telecom reported.
Preliminary Counterpoint Research figures show Flipkart dominated online smartphone sales in India during the opening quarter of 2017, with 59 per cent of the market. Amazon pulled a 29 per cent share.
However, these represent a relatively small slice of the overall Indian smartphone pie, with online sales of the devices stagnating at around 33 per cent of the total in 2016, ET Telecom said.
The figures are broadly in line with recent research by IDC, which placed the proportion of smartphones sold online at 30 per cent. The majority of sales still occur in real-life stores, where consumers can literally get a feel for the devices before buying.
In addition to overcoming consumers’ preference for brick and mortar stores, Flipkart and Amazon also face increased competition from Chinese device vendors including Xiaomi, which are establishing their own online sales portals, ET Telecom said. IDC analysts said Chinese manufacturers are also competing in the so-called offline channels.
Amazon and Flipkart are fighting back by investing in improvements to their online channels and forging exclusive deals with smartphone manufacturers. The companies also developed special offers, ET Telecom noted, pointing to recent heavy discounts by Amazon, and plans by Flipkart to buy back devices at between 30 per cent and 50 per cent of their purchase price.
Flipkart’s future reach may also be improved by a recent deal to acquire Snapdeal.
Counterpoint Research in April tipped Flipkart, Amazon and Paytm to be the major online smartphone sales channels in India through 2017.