Flipkart, Amazon set to lose big chunk of business as mobile brands push offline sales

E-commerce platforms Flipkart and Amazon may soon lose their stranglehold on smartphone brands OnePlus, Xiaomi and Realme, among others, that are sold exclusively on their marketplace as these brands strengthen their offline push by forging partnerships with retailers such as Reliance Digital, Croma and Sangeetha Mobiles.

Currently, mobile phones account for half of the gross merchandise volume (GMV) of e-tailers, with RedSeer Consulting pegging it at 50 per cent in 2018. Considering that Flipkart and Amazon dominate the e-tailing market with over 70 per cent market share, they will be the hit hardest by offline expansion of these brands.

Bengaluru-based Sangeetha Mobiles, which has 600 mobile phone stores across south India and clocked a turnover of ₹1,700 crore in fiscal ended March 2019, has forged exclusive offline partnerships with OnePlus and Realme.

OnePlus mobile phones in the price bracket of ₹33,000-₹ 53,000 and Realme phones of ₹5,000 to ₹15,000 range will now be available at all Sangeetha stores.

“Customers will be offered the same discounts that are offered online by these brands. Until the new e-commerce policy came into effect on February 1, which restricts deep discounting, exclusive listings etc, it was not a level-playing field for offline retailers. We are now in a position to compete with e-tailers,” L Subhash Chandra, Managing Director, Sangeetha Mobiles, told BusinessLine .

Stating that Samsung, Vivo, Oppo, Mi and Apple phones contribute to 95 per cent of Sangeetha Mobiles’ business at present, he said, “We are already selling Xiaomi, and with these two exclusive partnerships, we expect FY20 to be a good year and are targeting to exit the year with ₹2,500 crore revenue.”

Offline expansion

Xiaomi, which began its offline operations two years ago, aims to have over 10,000 retail stores across its offline segments, including Mi Home, Mi Studio and preferred partner Xiaomi branded stores, by December this year. It has also partnered with large format retailers such as Croma, Sangeetha Mobiles, Vijay Sales and Reliance Digital.

OnePlus is chasing an aggressive target of 600 new stores this year. It entered India in December 2014 partnering exclusively with Amazon.in, and is now available in 150 Croma and 250 Reliance Digital stores, and has built an offline network of 4 Experience stores in Bengaluru, Chennai, New Delhi and Pune.

Realme, a sub-brand of Oppo sold only on Flipkart and Amazon, is now an independent entity, and is targeting to be present in 150 cities by the year-end. Currently, it is available in 8,000 multi-brand retail stores and its two exclusive brand stores in Delhi and Mumbai.

“Beginning June, you will see a dip of 10 per cent in online sales volumes of mobile phones, which will translate to a 18-20 per cent hit in GMV for e-tailers,” said Faisal Kawoosa, founder and principal analyst of research firm, techARC.

“Four out of 10 smartphones are sold online while six are sold offline, therefore online-first mobile phone brands like OnePlus, Realme and Xiaomi are aggressively expanding their offline presence to tap 60 per cent of the market. They are also partnering with third party offline retail specialists who take on inventory management, marketing, distribution and logistics for the brands,” he said.

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