Online smartphone sales brush aside India’s new e-commerce policy

Skyrocketing sales.
Skyrocketing sales.
Image: REUTERS/Pascal Rossignol
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Smartphone shipments through online channels in India were at their highest ever share of 43% in the January-March quarter of 2019.

Online shipments grew 17% year-on-year (YoY) in the quarter driven by new launches, sales events, and lucrative offers rolled out during the quarter, according to a study by the Hong Kong-based firm Counterpoint Research.

“Though Flipkart led the overall online market with a 53% share, Amazon grew faster” in the quarter with 38% YoY growth, the report said.

It should be noted that Amazon’s market share of 36% was at its highest ever in the online smartphone segment. Its share of the online premium smartphone segment (81%) was also at a record, mainly owing to sales of OnePlus, Samsung, and Apple handsets. Share of shipments from Walmart-owned Flipkart in the segment stood at 17%.

“Price cuts of popular devices and more launches drove online channel shipments to the highest ever level in Q1 2019. Xiaomi’s Redmi 6A, and Note 6 and 7 series, Samsung’s online exclusive M series, Realme 3, HONOR 10 Lite, and ASUS Zenfone Max Pro series were the major contributors for the growth of the online segment,” said Anshika Jain, research analyst at Counterpoint. “The high online channel share indicates that the new e-commerce policy has limited impact, and e-commerce giants have found a way to cope.”

This increase signals that the e-commerce players, which were seeking leniency in the new e-commerce policy introduced by the Indian government in February this year, have found a way to deal with the restrictions meant to provide a level playing field for local vendors.

Under the renewed policy, platforms like Amazon and Flipkart cannot sell products exclusively on their portals. Neither can online entities with foreign investments offer products sold by retailers in which they hold equity stake. The policy also bars online giants from stocking more than a quarter of their inventory from a single vendor.

The US government had expressed its concerns over these new rules.

“Samsung, traditionally strong in offline channels, focused on expanding in the online market with its M series on Amazon. Offline expansion is a key strategy for the growth of smartphone players, we believe that the online channel will continue to hold significant importance in a price-conscious market like India,” said Tarun Pathak, associate director at Counterpoint Research.