Samsung has been asked by its 5,000-6,000 mobile phone retailers to clear their claims which amount to over Rs 50 crore and have been not cleared since last year. Notably, most of the retailers are from Maharashtra.
Samsung Faces Retailer Backlash Over Unpaid Margins and Discounts
The company had asked retailers to offer some discounts to the consumers under certain schemes, in addition to this payment of margins was pending to since last year.
The company generally gives 8-10% margins to retailers for selling its smartphones.
The retailers said that the payment is pending by Samsung from the January-March quarter of last year, which is particularly why it affects the financial position of retailers all the more.
The All India Mobile Phone Retailers Association (AIMRA) said in an email to the Senior VP of Samsung India mobile business, Raju Pullan, that “These retailers are crucial partners to the success of Samsung in the region, and their concerns must be addressed promptly”.
Notably, AIMRA represents over 150,000 mobile phone retailers across the nation.
As per the AIMRA executives, if the company fails to clear their dues then the retailers are planning to undertake a demonstration in front of the company office.
Ajit Jagtap, Maharashtra region president of AIMRA said that “We have had multiple meetings with Samsung executives, everytime they assure that they are settling the payment but it’s been over a year. This is unacceptable”.
for the sake of example, if Samsung asks the retailers to sell a phone is priced at Rs 40,000 for Rs 30,000 in order to give discounts to consumers, then it is Samsung who has to pay the balance of Rs 10000 to the retailers via credit notes over 45 days.
Samsung’s Settlement Practices and Offline Retail Dynamics
This settlement is not a cash settlement or reimbursement per se, but actually it is the adjustments in the dues that retailer in turn owes to Samsung.
As per offline retailers, the company settles the account in real time when discounts are offered to online retailers.
As per the industry executives, Samsung had made changes to its distributors list in Maharashtra and the same is the reason why this particular issue has been ongoing.
As per the market research company Counterpoint, Samsung regained the top spot in 2023 with 18% share, after many years after 2017. It has been driven by aggressive marketing in offline space in addition to focus on premium segment.
Notably, there has been a drop of 5% YoY in Samsung’s smartphone shipments to dealers and retailers in 2023.
Interestingly, it is not the first time that the association is writing to Samsung for settlement of dues. One of the historic communication from AIMRA reads “Pending claims are the complete responsibility of Samsung as all scheme letters received to retailers are from Samsung and not by any distributor”.
As per Counterpoint, the offline sales contribute to 55% share of the market, which can be attributed to consumers’ preference for the ‘look and feel’ of the device and hence more impetus is being laid by smartphone companies to drive the sales and grow their offline channels.
