A few years ago, I went to a local dealer and asked for a particular Nokia model. It was a low end model. He asked me to wait for 15 minutes so that he could source it from the main dealer. I asked him why he did not stock Nokia mobiles (that were selling like hot cakes then).

He said Nokia kept dropping prices often and he could not afford to stock them. “If I stock a few pieces of a particular model, and if the company slashes prices next week, I will be sitting on stock that I had got at a higher price and I would have to sell them within a stipulated time to get compensated. Nokia keeps slashing prices often. I can’t afford to stock much,” he said. I found that he had lots of Samsung and LG phones. “They maintain prices and don’t slash them often, and they also don’t sell much like Nokia,” he had said.

But now, I doubt he will stock Samsung phones also. Samsung keeps introducing phones faster than any other company, and naturally has to cut the prices of lower-end models and also models that have lower specifications but are priced on par with the new model.

When Samsung cut prices of a few Galaxy models last week, a dealer I met said he had just stocked a fast-moving model a week ago, and was left with almost half the stock and had no hope of selling them within two weeks.

Stockists have a buffer of around seven to 14 days during which they have to sell their old stock (bought at the old -higher- price) and would be compensated for the price drop by the dealer. If they are unable to sell the phones within the time, they have to bear the loss.

Dealers are in a catch-22 situation with fast selling models. They can’t stock them in large numbers because in case of a price cut, they will be suffering huge losses if they don’t sell them within the stipulated period.

It was Nokia earlier. Now it is Samsung.

> dinakaran.rengachary@thehindu.co.in

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