Samsung dealers threaten boycott over e-pricing

 Samsung dealers across the country have threatened to boycott the company's products over pricing concerns. 

As it grapples with depleting market share, Samsung Electronics — the world's biggest mobile-phone maker by shipments — has got itself in more trouble as hundreds of Samsung dealers across the country have threatened to boycott the company's products over pricing concerns. The dealers said that they would stop stocking Samsung phones unless the South Korean tech giant takes steps to narrow the wide gap in pricing between its phones sold at various multibrand outlets and on ecommerce sites.

"How can the company expect us to meet targets when customers can buy its phones online at huge discounts? Samsung gives us a 5.5% margin, while the same phones are being sold online at 20-30% discount," said Sunil Arora, a Samsung phone dealer in the Capital. Arora said that around 300 dealers have joined the movement, mainly due to drummed-up support through Facebook and WhatsApp, and the number is growing. 

"Samsung executives have requested us not to take any drastic steps and have promised to change things. We have given them time till August 15. If we don't see any positive steps, we will black out Samsung hoardings at our shops," he added. 

Asked about the unrest in the company's distribution network, Asim Warsi, VP (marketing, mobiles and IT), Samsung India, said that dialogue with channel partners is an ongoing process. 

However, the numbers tell a different story. Globally, Samsung has reported its worst quarterly profit in two years due to slowdown in sales of its smartphones and tablets. IDC estimates that Samsung's glob al smartphone shipments saw a year-on-year drop in the second quarter, from around 33% market share to 25%. The company has attributed this to increasing competition from lowand mid-end Chinese phone makers. 

In India, after being hit by manufacturers of lowand mid-end phones, who are now selling online at cheaper prices, Samsung's sales in the high-end category saw stiff competition from Sony and Apple's flagship devices. Its market share in the Rs 30,000and-above category dropped by around 50% -from 72% in 2012 to 34% in 2013, according to IDC figures. In the same period, Sony's market share grew from 1% to 18% and Apple's market share grew from 18% to 22%.

However, Warsi said that Samsung is still the dominant player in the market. "We still have more than 40% market share in terms of value but it's true that due to dynamic market conditions we are losing market share in the Rs 30,000-and-above category ," he said.
Sanjay Sahni, another Samsung phone dealer, said, "Forced by stiff targets set by Samsung, some distributors used to offload their stocks in the wholesale market at big discounts and the same phones used to find their way online. In the last 15 days, after we started our agitation, online price of the S5 has stabilized. It has gone up from Rs 33,000 to Rs 38,000. But that's not enough. Samsung committed the biggest blunder by slashing the price of its flagship device by around 20% after just two months of its launch. We were caught in the lurch with unsold stocks and now loyal Samsung customers don't want to buy them because they are scared that the prices might fall further."
 

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