Online sales of smartphones in India continues to gather pace — expected to rise to 38% of all smartphone sales this quarter — even as Xiaomi is expected to outsell Samsung 4:1 online.
In total, 15 mln (1.5 cr) smartphones are likely to be sold through online channels in the festival quarter — a growth of 25% compared to last year, said market research firm Canalys said.
The share of online channels will rise to about 38% of all smartphones sold during the quarter, up from 35% in the previous three months and 29% last year.
Next quarter, the share of online retail is likely to rise to 40%, according to Canalys.
The numbers dispel concerns about a potential slowdown in online retail in India, given the massive shakeout that the segment is witnessing.
Many players, such as Snapdeal — once the No.2 — have lost much of their growth momentum due to consolidation in the sector and a drying up of venture funding.
However, said Canalys, such factors are unlikely to impact the sales of smartphones — by far the biggest category of online sales in India — this year.
“Online retail is seeing fresh vigor in India,” said Canalys Analyst TuanAnh Nguyen.
“Walmart’s acquisition of Flipkart and Alibaba’s investment into PayTM has infused much needed optimism in the industry, with smartphones being the most popular products sold on these platforms, benefiting directly from these investments.”
Last quarter had seen even bigger growth in online smartphone sales in India, with overall sales zooming 65% compared to last year to over 11.7 mln units.
XIAOMI’S MARKET
The rising share of online sales is good news for Xiaomi.
The Chinese brand is by far the biggest online brand in India: 54% of all smartphones sold online is made by Xiaomi.
Samsung is a distant No.2 with a share of just 13%, followed by Huawei at 7% of the online market.
Online channels are dominated by two vendors — Flipkart and Amazon — while others like Paytm and Mi.com also present.
“As the online market continues to grow, two players will emerge as the true winners – Amazon and Flipkart,” Canalys said.
Within online sales, said Canalys, third party websites like Amazon, Flipkart and Paytm accounted for 91% of the total volumes, while brand websites, like mi.com, oneplus.com and shop.samsung.com accounted for only 9%.
The firm also noted that new sub-brands have emerged, targeting only the online consumer.
“Xiaomi’s Pocophone and Oppo’s RealMe are expected to boost shipments in Q3 and Q4, further underlining the importance of these channels when launching new brands in India,” it said.
CHALLENGER STRATEGY
India’s widely independent retail network and fragmented oine retail has been a sticking point for most vendors looking to grow against dominant players like Xiaomi and Samsung, it pointed out.
Dominant brands often exert a high degree of influence over independent distributors, which makes it difficult for ‘challenger brands’ such as Asus and Lenovo to break through.
This is forcing some brands to focus more on the online channel.
“Asus, whose Indian business was 100% distributor led until Q1 2018, revamped its go-to-market and moved to 100% online-only within months,” it pointed out.
Since then, Asus has since tripled its shipments sequentially in Q2 2018 and is looking for a record performance in India in Q3 2018.
Other smartphone vendors have also realigned their strategies in recognition of the growing importance of these retailers.
“While it’s difficult to shake Xiaomi’s dominance, vendors have begun to build partnerships with leading e-commerce players and are challenging the status quo,” said Canalys Research Manager Rushabh Doshi.
“Oppo’s online-only brand RealMe promises to boost performance of the Chinese brand that has struggled to grow in recent quarters.”