iPhone 6 in India: Offline retailers threaten boycott

Some mobile phone retailers have threatened to boycott Apple's much-awaited iPhone 6 and 6 Plus models after their expected pre-Diwali launch.

Some mobile phone retailers have threatened to boycott Apple's much-awaited iPhone 6 and 6 Plus models after their expected pre-Diwali launch because they are miffed that the iPhone 5S is being offered at heavily discounted prices on popular e-commerce sites Amazon, Flipkart and Snapdeal.

According to sellers that ET spoke to, some of the 1.5 lakh retailers claimed they have returned their iPhone 5S models, saying they can't compete with the discounts, which have lowered the price of the device to less than their cost. "All over India, there is a huge uproar and heartburn among retailers against online sellers since their business and reputation is being lost," said Subhash Chandra, managing director of retail store chain Sangeetha Mobiles, adding that offline sellers were adversely affected as customers were increasingly going online.

A top executive at another retailer told ET that if things stay as they are, he would neither display nor sell the Apple iPhone 6 or 6 Plus.

Apple products are distributed in India by Redington and Ingram Micro. ET could not independently confirm whether retailers had returned iPhone 5S models. Apple didn't respond to e-mailed queries seeking comment. An executive close to dealings at Apple India said the company hasn't authorised marketplaces such as Amazon, Flipkart and Snapdeal to sell iPhones in India. Infibeam is the sole authorised online seller for iPhones while Flipkart is authorised to sell iPads and iPods.

The emergence of online retailing and its pricing benefits and the rift created with traditional sales channels exists in other global markets as well.In India, where the online retail growth story has only just begun, about 12-14% of mobile phone sales are being diverted from offline retailers on a monthly basis, according to research firm Convergence Catalyst. This will only increase as internet penetration spreads and e-commerce grows.

"There is unrest among retailers, as even brands are supporting online," said Satish Babu, founder of retail store chain UniverCell Mobiles.

Titu Tanwani, one of the largest distributors of mobile phones in Jaipur, told ET that many retailers had decided to stop selling iPhones as they were facing massive flak from consumers who are able to buy the devices online at much lower prices.

"The price difference is as high as Rs 11,000 on some models. Apple is liquidating stocks of the older models," he said, alleging that the company was doing so in anticipation of the iPhone 6 and iPhone 6 Plus launch expected next month. He added that state trade associations, such as that of Rajasthan, were protesting against the brands.

E-commerce sites show that the 16GB iPhone 5S, the highest-selling model for the company in India this year, on offer at between Rs 34,000 and Rs 36,000, as much as 36% less than the original retail price of Rs 53,500. The 16GB iPhone 5S is available on Amazon for Rs 33,999.

Tanwani added that retailers were also rallying against local handset makers. The retailers are threatening to boycott Micromax, Spice and Karbonn, which have launched devices backed by Google's Android One platform exclusively online. Google has partnered with Micromax, Karbonn and Spice to sell Android One smartphones priced between Rs 6,299 and Rs 6,499, exclusively on the three e-commerce sites. Spice didn't respond to ET's queries at the time of writing.

"To ensure convenient access to our devices, our distribution strategy is a judicious mix of both traditional and new-age sales channels. Retailers continue to be the lynchpin of our distribution nexus and we would continue to expand our retail network in the future," Karbonn said in a statement.

A Micromax company spokesperson said all distribution channels will coexist but consumers should have the choice to buy from any platform they choose. "India is a huge market and, hence, different channels are developing to serve the various consumer segments. As part of our tactical promotions, we might choose a partner for a particular activity but our strategic intent is a balanced approach towards all sales channels."

A senior executive from a large-format retail chain told ET that he had returned his Apple phones to distributors in protest, adding that they cannot compete with prices offered online. "We will be talking to the brands individually, but I won't hesitate to boycott a brand if I am being treated unfairly." Several large-format retailers, including UniverCell, Sangeetha Mobiles, The Mobile Store and Spice's Hot Spot, have created an informal association that is trying to sort out the situation and will be speaking to consumers and the government on the matter, which they say threatens their survival.

However, the existence of e-commerce stores and competition from them are a reality that none of the retailers can ignore, said The Mobile Store's chief executive Himanshu Chakravarti
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