Samsung goes offline with mobile phones

NEW DELHI (TIP): In a move that might change the dynamics of India’s booming mobile phone market, Samsung Electronics, one of the country’s largest phone makers, has decided to take the offline retail route even as the rest of the world is moving online.

While its peers like Xiaomi and Motorola are busy selling millions of handsets online, the Korean giant has given in to mounting pressure from thousands of brick-and-mortar retailers over predatory online pricing and has decided to extend exclusivity on selling rights of 48 models, including its muchawaited Galaxy Alpha and Note 4, to offline retailers. Offline handset retailers have been facing the heat from their online counterparts due to heavy discounts offered online, which they couldn’t match.

This has led to the formation of All India Mobile Retailers Association (AIMRA), a body that has vowed to work for the mutual benefits of brickand- mortar retailers and maintain price hygiene across trade channels. TOI had reported in August that Samsung was facing dealer unrest due to predatory pricing by online retailers. While addressing a large gathering of retailers from AIMRA in the capital recently, a senior executive with Samsung Electronics said: “We have taken action against many rogue distributors, who were dumping their stocks online and beating down the price of our handsets.

We are working hard to bring back price hygiene in the market. Our revenues from online sales have come down from 30% to single digit. We also have plans to stop billing WS Retail, the largest reseller on Flipkart.” The executive said that Samsung has struck a deal with various e-tailers, wherein the company would give them exclusive rights to sell one or two models in return for the promise that they are going to maintain the price sanctity of Samsung handsets.

Earlier this month, Samsung made Flipkart the exclusive launch partner for the Galaxy S5 Mini. Interestingly, according to retailers, the difference in prices between Samsung handsets sold online and offline has narrowed considerably since August when a Galaxy S5 that was being sold for Rs 38,000 at retail stores was being offered for Rs 36,000 online. “Now, there is hardly any difference,” an AIMRA spokesperson said. An emailed questionnaire to Samsung did not elicit any response. Retail experts have taken its move with a pinch of salt.

“It’s a regressive move, especially before the festive season when you are going to see a lot of discounts online,” said Arvind Singhal, founder and chairman of retail consultancy, Technopak. “Perhaps the fact that around 80% of India’s Rs 60,000-crore handset business is still done through offline retail might be reason for the company to shy away from online trade. But, Samsung needs to wake up to the fact that it’s not the future since Chinese manufacturers are offering same spec handsets at one third of the price.”

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