Mobiles & Tablets

After Motorola success, handset-makers go online to sell

Abhishek Law Kolkata | Updated on May 29, 2014

Unlike China, this route only now being explored by Indian companies

On February 6, Motorola launched its “MotoG” handsets in India “exclusively” through Flipkart, doing away with traditional stores. The gamble paid off as the US-based company saw the 16GB version being sold out in the first 15 minutes, sources indicated.

What this did was spawn a whole generation of exclusive launches through e-commerce sites.

And not just Indian handset-makers such as Karbonn, Maxx or Intex, even Chinese companies like Gionee or Huawei are now exploring similar options.

Alcatel tied up with Flipkart for sale of its “One Touch” smartphone. In most cases, the device-maker has a tie-up with one e-tailer through whom offerings are introduced. After a period of 15-odd days, it is introduced in brick-and-mortar stores or it may continue as an online-specific model across other sites.

“The trend of online launches has picked up over the last few months. And we will explore options in the coming days,” Sashin Devsare, Executive Director, Karbonn Mobiles, told Business Line.

Internet usage

According to him, increasing dependence on Internet to compare products has led to the popularity. Karbonn, which recently launched its “Titanium Hexa” smartphone, exclusively through Amazon, claims to witness “good” response. The device is yet to be introduced in the traditional stores.

In India, such exclusive online launches may be at a nascent stage. But in China Internet online sales are a major force.

Just 5-6 per cent of the handsets are sold online here, with traditional format accounting for the lion’s share.

Market sources indicate that the model of exclusive online launches comes as a win-win for e-commerce sites and consumers.

While consumer benefits in terms of price and freebies (such as flip covers, back covers, bluetooth-enabled headsets), the e-commerce sites witness increased traffic.

For example, Flipkart’s site was said to have gone down for a couple of minutes because of increased traffic on the day “MotoG” was launched. Similarly, page views went up by 100 per cent and inbound customer support numbers doubled. Unofficial estimates peg mobile phones and accessories to contribute nearly 30 per cent towards a portal’s revenues; a three-fold growth over a year-ago period.

Direct Link

According to Keshav Bansal, Director Marketing, Intex Technologies, a device-maker on the other hand gets a first hand feel of the response for the product along with direct customer feedback. Plus online selling results in volume sales.

Intex attempted to go the Motorola-way with its “Aqua Octa” smartphone launch on Snapdeal earlier in November 2013.

However, it is yet to take up such exclusive online launches on a full scale. Benefits come in the form of reduced freight charges (borne by e-comm sites), universal VAT rates and control over channel margins.

Cost analysis

However, it is not that online sales result in huge savings compared with the traditional format. “Benefit made by eliminating the distribution model is passed on either to the e-commerce platform or the consumer,” Ajjay Agarwal, CMD, Maxx Mobile, maintained.

Maxx is already in talks with some e-commerce players to adopt this model by June end.

According to him, increased price sensitivity has resulted in lower margins for device makers. Each device maker vies for volume sales, thereby competes on price.

Freebies and special discounts on pre-booking or exclusive launches also add-up to costs.

Published on May 29, 2014

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