We told you 2 months ago how Apple is bringing back its popular model iPhone 4 for India with a view to sell off its inventory and also not to miss the emerging smartphone consumption giant which is India.
Now, Apple is pulling up its socks again and changing its strategy with specific reference to India – it is coming up with small, neighbourhood shops in big cities and tier II markets, in a bid to get closer to potential buyers as it pushes ahead with an India-specific strategy aimed at trying to grab market share from dominant rival Samsung.
Apple products are already distributed in India mainly through Apple distributors Redington and Ingram Micro. These shops will also be set up by Apple distributors Redington and Ingram Micro besides existing trade partners and follows the revival of the iPhone 4 for sale in India and other emerging markets, which gave buyers who covet the brand the option of a phone that costs much less than latest models.
Forced by Samsung?
Apple’s global rival is also pushing them to the wall in India. Samsung has more than 1,000 Smartphone Cafes through which it sells off its wide range of smartphones and tablets. As Apple had always kept India on the backburner, its only now that the local management has been given a free hand has sought to push phones and tablets through exchange and finance programmes, besides reintroducing the iPhone 4, which is defunct elsewhere.
Why suddenly this interest in India?
Apple had around 2% volume market share of the Indian smartphone market in the October-December 2013 quarter, far behind market leader Samsung at 32% share and Micromax at 21%.
Apple’s value share, however, is higher due to the price of its phones, with the iPhone 5c starting at 41,900. That’s why reintroducing the iPhone 4, at a price that could go as low as 21,000, made sense for India.
Apple understands India has a huge growth potential, and they want to tap into it before it gets too late for them.
With a very unpredictable India retail industry, store sizes are never guaranteed to be correct without an experiment.
Apple has informed distributors and trade partners in recent meetings that it is looking to set up exclusive 400-600 sq ft stores in neighborhoods and some popular high-street locations. This is a very different thought from the other brands which look to open up in malls first.
It is also a very different strategy from how Apple operates its stores globally, where they have huge plush marquee Apple stores!
Apple wants to set up these smaller stores in areas where people have high disposable incomes, there’s a strong penetration of smartphones and a large student population such as Pune, Vizag, Guwahati, Durgapur and Gangtok.
Selling what all?
Apple will focus on mobility products such as iPhones and iPads, besides entry-level Mac computers and iPods, said three of Apple’s trade partners aware of the plans.
What partners say?
“Apple wants to focus more on its entry-level models in these stores such as iPhone 4, iPhone 4s, iPad mini and iPad 2, which are essentially in the sub- 30,000 segment and also its largest-selling products in India. The company feels these products are also attractively priced over competitors such as Samsung and Sony, and hence, being closer to the consumer will help to increase the conversion rate.”
Not all partners are enthused by the plan. One leading electronics retail chain decided not to take up the offer as profit margins on Apple are already among the lowest – “After offering consumer discounts, the margin on iPhones and iPads is 2-5%, whereas it’s 7-10% for Samsung and other brands. Hence, it makes sense to continue with a multi-brand retail model where we can make more money.”
Is it too late for Apple to set up its feet firmly in India when Micromax has overthrown Nokia as the number 2 smartphone seller or the right time when the markets are at a tipping point?