Chinese handset makers Xiaomi and Realme have initiated a rigorous crackdown on online discount scalpers following complaints from retailer associations, in a bid to bolster growth in India's second-largest smartphone market through offline channels, the media has reported. According to a report by The Economic Times, both smartphone manufacturers are actively repurchasing stocks sold at reduced prices to identify and penalise retailers and distributors engaged in such practices.
To deter unauthorised sales, these brands are issuing warnings to retailers, who are required to sign agreements promising to sell products exclusively through authorised channels.
Instances of retailers in regions such as Jammu, West Bengal, Haryana, and Tamil Nadu signing such undertakings have been reported. This intensified scrutiny stems from grievances lodged by the All India Mobile Retailers Association (AIMRA), representing 1.5 lakh mobile phone retailers, regarding the sale of products online at prices lower than their minimum operating prices (MOP).
In response to AIMRA's concerns, a representative from Xiaomi committed to tackling the issue by purchasing stocks to trace their origin and implementing hefty penalties. This concerted effort comes amidst a shift in sales dynamics, with offline retail sales surpassing those from online platforms.
According to market research firm International Data Corporation (IDC) India, online platforms such as Amazon and Flipkart accounted for 48 per cent of total sales in January-February, down from 49 per cent in 2023.
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Retailers attribute their challenges to brands setting ambitious sales targets, compelling them to dispose of excess stock through alternative channels. Brands often favor online sales due to lower overhead costs compared to retail stores, where distributor and retailer margins influence pricing structures. Some products are exclusively marketed online to maintain competitive prices, while others remain exclusive to brick-and-mortar stores.
In a bid to meet sales targets, retailers occasionally list products on competing platforms, exacerbating the issue.
As one Delhi-based retailer lamented, according to the report: "With such hefty targets on us, we have no choice but to liquidate stocks through other means." This ongoing struggle underscores the complex dynamics between brands, retailers, and online platforms within India's dynamic smartphone market.