Realme to go ahead with offline expansion plans

Abhishek Law Kolkata | Updated on May 21, 2020

Madhav Sheth, CEO, Realme India

Smartphone-maker expects sales to pick up in the second half

Smartphone-maker Realme will be going ahead with its plans to expand offline presence across the country this year. Tier-II to Tier-V will be amongst the immediate focus markets as “coronavirus” effects continue to be relatively lower there; when compared to Tier-I markets or major cities.

The company has not scaled down its R&D spends “as of yet”, while launches, even though delayed, are likely to happen.

Economic activities in India are restarting with Lockdown 4.0 guidelines being implemented all across.

According to Madhav Sheth, CEO, Realme India and Vice-President, Realme, the company has “not cancelled” offline expansion plans and will “optimise investments”.

The smartphone maker began its journey in India as an “online only” sub-brand of Oppo, but was subsequently spun-off into an independent entity. It has turned out to be amongst the top four vendors in the country.

For 2020, the brand intends to be present across 35,000-odd outlets pan India, through 400-plus distributors. Nearly, 40 per cent of its sales are expected through offline channels.

“Investments in offline channel will happen as we have decided for the year. We will look at the Tier-II to Tier-V markers where impact of the virus has been the least, at least in the immediate short run. As impact of the virus in cities and Tier-I markets subside, we will focus on expanding here too,” he told BusinessLine.

The company, recently, launched its Narzo smartphone series after an initial delay due to the Covid-induced lockdown. The company will explore adjacencies, that include wearables, connected devices like TVs, ear-buds and so on.

“There could be delayed launches across categories. But, we are are not cancelling anything yet,” he said.

Smartphone sales to decline

Incidentally, offline retail is in a bad shape with the lockdown severely affecting businesses. In April and mostly across May, shops have remained closed. Nearly, 65 per cent of mobile sales in India is through shops / offline retail, while the remaining 35 per cent is though online channels.

The sub-₹10,000 devices are expected to bear the highest brunt, according to market sources. However, there will be some pent-up demand that may move towards the festival seasons or second half of the fiscal.

Smartphone shipments, different analysts say, have been near zero for April and May; while overall sales / shipments during the year (2020) could see a decline of at least10-15 per cent.

“A 40-day plus loss in sales and stoppage of economic activities will be difficult to make up, for the industry. However, we are optimistic of sales picking-up in select price points,” Sheth said.

Logistics and supply issues

Market sources point out that supply and logistics continue to be a major challenge for smartphone makers, at present.

Production has begun across Realme’s factory located at Greater Noida. It is operating at 25 per cent production capacity or with 2,000-odd people.

Nearly, 60 per cent of components are manufactured in India while another 40 per cent are imported. According to Sheth, there were supply chain disruptions. Import items have also been stuck at the customs end for sometime.

“It should take some two to four weeks for nomalisation in supply chains and production to happen,” he added. Logistics issues are also be worked out, sources say.

Published on May 20, 2020

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