Mobile companies ride on e-commerce boom to boost sales

Mobile companies ride on e-commerce boom to boost sales

Author | Deepa Balasubramanian | Thursday, Oct 16,2014 8:06 AM

Mobile companies ride on e-commerce boom to boost sales

The e-commerce industry in India has seen unprecedented growth lately and especially the gadgets including smartphones and tablets that have found the online market place a viable option for selling.

According to ASSOCHAM’s recent report, the blitzkrieg is expected in the e-commerce space vying for higher sales in mobile phones, shoes, apparel, gifts and electronic gadgets.

What is interesting is the trend of mobile phones having their launch via e-commerce portals such as Flipkart, Snapdeal and Amazon. A lot of brands are tying up exclusively with e-commerce portals to sell their devices online. These brands are available to the consumers only through the online medium and are not present in the offline market. Due to this, more and more people are opting for buying their new devices online.

Mobiles have been the highest selling category at Flipkart. Recently, we saw Chinese phone maker Xiaomi launched its Mi 3 Smartphone via Flipkart and the website crashed due to the traffic on the lunch day. Prior to that Motorola which launched its Moto E smartphone also witnessed similar success.

According to Tony Navin, Senior Vice President – Electronics & Home, the smartphone market in the past year has witnessed some revolutionary changes with prices for devices going as low as Rs 1999, without lacking in features. Consumers, thus, have a range of options to choose from. With these changes there has been a facelift in the smartphone market in the online space.

Navin, said, “The customers are becoming more and more comfortable with the idea of buying electronic products from the online medium. This is the reason why Mobile and Tablets is one of our most popular categories on which has been growing at over 30 per cent month on month. From a revenue perspective because of higher ticket value, mobiles and other electronics categories take larger share at Snapdeal.”

Samir Kumar, Director- Category Management, Amazon India said, “Mobile phones are some of the fastest growing products in the consumer electronics department on and we continue to receive an overwhelming response from customers. We are very excited at being the partner of choice for several brands who have launched their latest offering exclusively on our marketplace. Brands and sellers see a lot of value in their association with us. We not only play a significant role in driving sales but also in building consumer awareness about products and educating them about the benefits of these offerings so that they are able to make smart purchase decisions.”

Mobiles being a highly standardized category with renowned brands selling online, it is well accepted amongst consumers as a category to be bought predominantly online. Not only the big companies such as Apple, Samsung and HTC garner noteworthy sales but smaller mobile phone sellers such as Xolo, Celkon, Intex and latest one being Jolla have been able to achieve record sales on the e-commerce sites. Xolo and Celkon for instance have had exclusive deals with Snapdeal in the recent past.

Oplus has tied up with Snapdeal as an exclusive and strategic partner to cater to its pan-India network. Recently, Oplus had brought out two products in the market- The XonPad 7 (7-inch tablet) and the XonPhone 5 (5-inch smart phone).

Talking about the partnership with Snapdeal, Soumitra Gupta, Managing Director and CEO, Oplus India said, “Online marketing through has enabled us to reach a pan-India audience which is in line with our business strategy. This also enables us to give the best price to the consumer directly and cut out the middle-men. Priced extremely competitively, both the phone and tablet have already received a tremendous response in the Indian market.”

Not only the launch, Oplus had created some offers to grab the attention of customers. They had come up with a campaign with Aircel and Snapdeal, where if someone does a recharge for Rs 120 or more they stand a chance to win XonPhone 5 and ‘Privileged first 500’ customers for the XonPhone5 received Flip covers free of cost.

For Lava, an Indian mobile handset company, Smartphones and Tablets are the two categories that have been doing extremely well through e-commerce. Lava launched its Iris X1 and X5 exclusively with accompanied by heavy branding on the e-commerce platform to generate awareness in the first few days post launch. Lava’s Iris X1 for instance was sold out on the first day of the launch. Lava also had maximum views on Amazon and GSM Arena in comparison to other Lava products listed there. They had also launched its first e-store with eBay for the convenient purchasing recently.

However, Tarun Verma, Head-Marketing, Lava International said, “At Lava, we have equally emphasised on both traditional and online marketing medium for sales. Lava’s share of business from the e-commerce platform has been growing steadily and has also witnessed a strong growth in the offline retail. Lava’s strategy for the FY14-15 is predominantly O2O which means that the activities will be planned and executed to first drive traffic online for awareness/ engagement and then offline for activation and purchase. Hence digital and retail will be two key focus areas. We have a total marketing budget in excess of Rs 220 crore planned for FY 13-14, which is an increase of more than 250 per cent over last year. We will be spending approximately 50 per cent of this on TV advertising.”

As per a report by Assocham, in 2009, India’s e-commerce market stood at $2.5 billion. By 2012 it reached $8.5 billion, and reached nearly $16 billion in 2013.

A paradigm shift in consumer buying behaviour has been witnessed in the last one year. Earlier established brands commanded the maximum market share and displaced all other manufacturers. But, recently, the market has opened up and many new brands packed with state-of-the-art features in low price brackets are gaining popularity amongst the price-sensitive Indian consumers. According to research conducted by Euromonitor International, low cost phones will drive the smart phone demand in India. Low-cost quality smartphones are already disrupting feature phone market in India.

Online selling is on a growing spree when it comes to overall retail pie, although traditional brick-and-mortar stores still do well in many sectors of the economy. It may vary depending on nature of the product, availability, requirement of customer interaction, cost of the product, etc.  With the penetration of internet, purchasing has become more convenient to the customers. Consumers are able to read/ write reviews before making a purchase decision and big online vendors offering heavily discounted prices with wide choice of products and no sales tax are carving out a market for themselves. The emergence of ‘showrooming’ in which shoppers can examine products in showrooms but make their purchases online, has further added to the popularity of online buying and emerged as challenges for brick and mortar.

Way Forward

According to Verma, 3G is the way to go in the immediate future to increase the penetration of Smartphone users in tier 2 & 3 cities. The mobile internet revolution with deep penetration of telecom services in urban as well as rural India can transform the way people access and utilize information. It can revolutionize the e-governance initiatives, multiply the reach of such programs and maximize the benefits for the common man.

Although, on the OS front Android will continue to be the leader in the Indian mobile ecosystem in the short to medium term given the value it provides to the user being an open source platform.

With the ongoing trend, India is set to become the third-largest market for smartphones in next four years. As per IDC report, with device manufacturers launching affordable 3G handsets and looking to tap demand in small cities and towns, smartphone shipments in India is forecasted to rise to 155.6 million units in 2017.

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