Leading Offline Retailers Boycott Android One Devices Due Their Online-Only-Launch
Android One is one of Google’s projects, announced in Google I/O earlier this year, through which it had hoped to rope in more people to Android Ecosystem by providing them with Standardized experience with cheaper price tags. India, due to the sheer size of its population, was the first country where the three Android One models were launched in mid-September.
Google’s decision to launch their product online initially, however, seems to have miffed off the Indian retailers who have together decided not to sell any of Google’s three Android One products across any of their stores altogether.
As has already been pointed out here in an earlier article, offline sales across brick and mortar stores have been adversely affected by the easy availability and cheap price tags of products online. The fact that most products are sold at discounted prices on e-commerce portals has not helped either. The friction between and online and offline retailers has therefore been building up for quite some time.
All the three first generation handsets produced by the search engine giant which had been co-developed with three leading Indian vendors, Micromax, Karbonn and Lava were launched in the country through the three leading online retailing sites- Flipkart, Amazon and Snapdeal.
A decision which Google did not, at that point of time, realize it would have to pay heavily for.
Planet M Retail, BigC, Tata-owned Croma, Sangeetha Mobiles, Future Group, Reliance Retail, Lot Mobiles and BigC peeved off by the online launch of the three products, decided not to stock any of them at their stores (totaling 1,800 of them) anywhere in the country.
“Since Android One decided not to sell in physical stores during its launch, we as part of modern trade, have decided not to stock Android One either,” said Sangeetha Mobiles MD Subhash Chandra.
This might not be the only reason for their decision to boycott the sales of Google’s Android One devices. Industry insiders said that the poor dealer margin (3-4%) is another reason they have decided to refrain from selling these devices. [Check out Why IDC had predicted that Android One will find it tough in India]
The CEO of another top consumer electronics retail chain said the margin offered for Android One was around 3-4% which is much less than the industry average of 9-10%. “No point wasting energy,” he said.
UniverCell and The MobileStore, two other offline chains selling electronics did introduce Karbonn Android One two weeks ago but have no plans to introduce the other two products as well.
Himanshu Chakrawarti, Chief Executive Officer of The MobileStore, said this company would monitor the sales of the Karbonn product for some more time before taking the final decision though he did not sound too optimistic about it, given that the sales from Karbonn have not really set the cash registers ringing.
Inspite of huge advertising, the initial sales of the three products have been far from encouraging. A classic case of marketing strategy having gone all wrong.
After delayed launch, they stuck to online sales- which constitute only 12% of total smartphone sales in India. During that crucial period, phones like Redmi 1S and Moto E, who compete in similar segment captured the market and have continued to reign supreme ever since.
Android One handset imports to India have been to the tune of 4,80,000 devices till date (as per Cybex Exim Solutions), which is only 3% of the total smartphones shipped into the country during the period.
“The price band at which the phones were launched has a huge offline acceptance,” said Karan Thakkar, market analyst with IDC. Had the company decided to launch the product for sales across both online and offline simultaneously, they could well have been laughing all the way to the bank by now, instead of rubbing their hands in despair.
That has been corroborated by statements from both Spice and Karbonn that their sales shot up after they started selling their respective Android One products offline as well. 80% of the total 100,000 units of Spice owned Android One have been sold offline, confirms the manufacturer.
Though Pradeep Jain, Managing Director, Karbonn mobiles, is not happy with the sales so far and agrees that the much hyped Android One has under–performed, going for offline sales has helped take sales to a respectable level. His brand of Android One product is selling nearly 3,000 units offline every day, as compared to only 500 online sales.
Only goes to prove that Google is not ALWAYS right. Even Google can go wrong- as it did this time. Not only did it lose out on a greater share of the market and performed below expectations due to its ‘only-online-launch’ policy, it has riled off some major offline retailers for which it is now paying through their nose.