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Counterpoint Research Shows that Online Smartphone Sales have Declined in India: E-commerce Brands Disagree!

Shikhar Srivastava

Research firm Counterpoint Research has released a new report which indicates that online smartphone sales for the Indian smartphone market have declined in the first half of 2016. If the findings of the report are accurate this would mark a very interesting turn of events for the smartphone market in India.

This time last year, the Indian smartphone space was buzzing with online sales of multiple products from many brands but this report claims that is no longer the case.

In the second half of 2015, online smartphone sales grew a significant percentage. According to Counterpoint Research the total share of online sales of smartphone in the April-June 2015 quarter was 28%. In the second half of 2015, however, this share grew to 37%. The report states that in the first half of 2016 this share has dropped to 32%.

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There are speculations as to what might have led to this said decline. One potential reason could be the recent change in e-commerce rules. These changes are said to have effected the discounts on online sales of products. As the discounts begin to diminish the consumers are said to be flocking towards offline stores to buy their smartphones. According to the report online sales accounted for 33% of total sales in the Jan-March quarter of 2016.

E-commerce brands are disputing these findings. If they are to be believed, the online sales model has continued to flourish in the first half of 2016. The major reasons why people buy, or even browse, products online are convenience and discounts. Ease of use is a key factor. Not having to make a trip to a brick and mortar shop to choose or buy your next smartphone in the midst of a busy daily routine, and godawful traffic, matters. Nothing really beats the convenience factor for the consumers that the online sales model offers.

Discounts and deals are the other major factor. E-commerce portals offer discounts on smartphones which leads to there being a significant difference in the prices of the same product online and offline. This of course convinces the consumer to buy online.

One of the key drivers for online sales has been convenience, assortment and special price or discounting. If one of these factors is taken away, then consumers that were buying for that factor will not find it lucrative.
– Atul Jain, COO, LeEco
The two major players in the Indian e-commerce space Flipkart and Amazon have both voiced disagreements with these findings. According to them the online sales share of smartphones currently ranges between 33%-37% and this will only increase over time.
Share of online sales in smartphones has increased by 2 per cent in the last quarter as compared to December 2015 as per our estimates.
– Ajay Yadav, VP, Mobiles, Flipkart
Mr. Yadav’s assessment of the situation is hard to disagree with. There has been a marked increase in e-commerce activity over the last 12 months and more and more people are now comfortable buying products online. Here at iSpyPrice we enable people looking to buy smartphones online to choose a product of their liking, something that is in their budget, and is an informed buying decision.
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When visitors to our website do that they are doing so from a very large set of products on offer. No brick and mortar shop offers this level of convenience, which is why I agree with what the e-commerce brands have to say on these findings from Counterpoint Research.
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Counterpoint Research senior analyst Tarun Pathak sees the silver lining in these trends. India’s festive season is approaching. And there are few markets in the world which can boast of sales during festivities like the Indian market. That’s mainly because the festive season is fairly long and allows e-commerce brands to offer festive discounts and make irresistible offers to consumers, who usually wait all year long for the festive season sale.
Mr. Pathak expects the share of online sales of smartphones in India to grow to as much as 40% by the end of 2016, which is excellent news. With the ever increasing adoption of 4G phones in India and the proliferation of internet as a whole it would be naive to assume that online sales of smartphones will see a continuous decline of any relevance. If anything, it should see a continuous increase in future.