Is Samsung looking to add another feather to its cap by taking a step, which is in complete contrast with the ongoing trend in ecommerce? Offline retailers are in a rush to join the ecommerce bandwagon and capitalize on the popularity of online shopping. While the rest of the world is moving online, Samsung has surprised everyone by announcing its decision to take the conventional route in retail- the offline way.
Giving in to pressures from brick and mortar retailers, who are facing problems due to predatory online pricing, the South Korean giant will now extend exclusive selling rights of 48 models to offline retailers. This at a time when competitors like Xiaomi and Motorola are minting money and popularity by selling through the online channels.
How were the offline retailers getting harmed?
For a while now, offline retailers have been forced to wear the brunt of price slashes and cuts by online retailers. It is difficult for them to match up to the deals and discounts offered online.
As a relief for offline retailers, the All India Mobile Retailers Association (AIMRA) was formed to work out mutual benefits for offline retailers as well as to maintain uniform prices across all channels.
Addressing a large gathering of retailers part of AIMRA, a senior Samsung Electronics Executive 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.”
Also, he added that Samsung has worked out deals with a couple of online retailers such that offline retailers would not lose out on sales. In exchange for maintaining price sanctity of Samsung handsets, online retailers would get exclusive rights to sell some Samsung models. Flipkart was the exclusive launch partner of Samsung Galaxy S5 Mini earlier this month.
“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.”
.. that this could be the way forward in ecommerce. Right now, it is a price-driven market and consumers have been pampered to extremes with the unbeatable deals and discounts. But to sustain and finally have profits, online selling needs to become more service-driven. And this move from Samsung could be a small step towards that.
After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!
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