Andhra Pradesh

Cell phone retailers lose out to online players

Retail mobile phone sellers stage protest in Ongole on Saturday.photo: Kommuri Srinivas

Retail mobile phone sellers stage protest in Ongole on Saturday.photo: Kommuri Srinivas   | Photo Credit: kommuri Srinivas

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The reason is not far to seek. With the advent of smartphones and the spread of 3G services, consumers are migrating to online sales platforms.

Until three months ago, G. Durga Mahesh’s mobile phone store at Governorpet in Vijayawada used to sell at least 25 handsets every day. Now sales have come down to 10 handsets. Retailers across the state report a 50 per cent drop in sales.

The reason is not far to seek. With the advent of smartphones and the spread of 3G services, consumers are migrating to online sales platforms.

In a peculiar development common to other retail sectors that have been affected by the spread of online shopping, footfalls may not have fallen in brick-and-mortar showrooms but sales certainly have.

“Most customers come to my retail outlet to enquire about the models, the features and the price. They bargain a bit and leave, saying they’ll be back. They don’t come back. They go online and search for a 10 to 15 per cent bargain.”

Clearly, the writing is on the wall for mobile phone business. After mobile phone businesses flourished in the brick-and-mortal retail format for 15 years, the companies themselves have started according priority to online sales to cut down their marketing expenditure.

Sensing the online trend early, large chains like Univercell launched online sales platforms years ago. It’s the solitary friendly neighbourhood showrooms that are taking the brunt of the buyer migration to online sales.

Riding annual sales growth trends of 30 to 40 per cent, phone manufacturers themselves are giving priority to online portals with deep discounts. “A handset costing around Rs.12,000 in the retail outlets is priced at Rs.9,500 on online sites,” says B. Naidu, a showroom owner on G.T. Road in Srikakulam.

This trend is threatening to drive conventional retailers out of business. In Tirupati, for instance, of the 350 retailers of all sizes in operation, 15 have closed down in the last year, several of them filing insolvency petitions, according to Mr. A.N. Prabhakar, president of the Tirupati Cellular Association.

“What puts us at a distinct disadvantage is the phenomenon of pre-release of new models,” says Mr. Prabhakar. “In a market where novelty is a major factor in purchase decisions, we just cannot compete if models are released to us weeks after they are available online.”

Retailers in Prakasam District said that they had no objection per se to e-commerce but what hurts sales most is that some mobile phone makers reserve the latest models exclusively for online platforms.

The Cell Phone Retailers’ Association’s Prakasam District president T. Balasubramanium says apart from the tax revenues lost by the State Government, the consumer also gets no realistic warranty on the products he buys.

With inputs from S. Murali (Ongole), A.D. Rangarajan (Tirupati) and K. Srinivas Rao (Srikakulam).

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Printable version | Jan 29, 2020 7:47:51 PM | https://www.thehindu.com/news/national/andhra-pradesh/cell-phone-retailers-lose-out-to-online-players/article7625193.ece

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