Large Smartphone Manufacturers May be able to Sell Smartphones Online Directly to Customers

About a couple of months back, Xiaomi opened its own local manufacturing unit in India to produce ‘Made in India’ phones and capture the market, where cheaper phone are in great need. According to reports, Global smartphone manufacturers will be able to sell their smartphones online through their own website directly to customers, without any agencies or e-commerce majors in the middle.

Xiaomi, Samsung, OnePlus and Lenovo and other handset makers may be able to sell their smartphones in India through their own platforms. but only if those devices are manufactured in India. This sounds like a good news to all the manufacturers who had pledged to start production in India by infusing more investments.

Recent changes in regulations pertaining to foreign investments have opened up plenty of doors for global smartphone manufacturers, provided they follow the ‘Make in India’ campaign led by Narendra Modi, Prime Minister of the country. As soon as the Department of Industrial Policy & Promotion defines the term ‘manufacturers’, the global handset makers will be able to sell their products to the customers directly only.

A senior government official commented, “We are finalizing the definition so that everyone will know whether they qualify to be called a manufacturer or not. It will be a part of the press note we will issue shortly.”.

We already know Xiaomi has partnered with Foxconn Technology Group to develop handsets in India, hence it is still a grey area whether such partnerships will be benefitting the companies to sell their smartphones directly. Another question is whether all the smartphones giants who are partly assembling their phones in India would be coming into the ambit of this policy.

What does it mean for E-commerce website in India?

While we do not expect all manufacturers to straight away launch their own e-commerce platforms to directly sell their smartphones to customers online, we do expect a certain transition from diverted route to the direct route.

Smartphone sales have been at an all time high this year and key players in the market like Amazon, Flipkart, Snapdeal, Infibeam etc have gained immensely from all the flash-sales and online-only models. One out of every five smartphones sold today is manufactured in India and it only makes sense for the manufacturers to sell their products through their own channels.

However, the move needs to be well thought out considering the large distribution services offered by the e-commerce websites, inventory management and marketing of the products handled by these players single-handedly. If Samsung wants to sell its smartphones through its own website in India, it would be a good chance to have complete ownership of its sales and revenues. There would be no margins cut by e-tailers and unnecessary blame-games played by the companies.

It is a matter of weighing the pros and cons effectively and coming out with a profitable solution. While some manufacturers like OnePlus might feel it is a beneficial move for the OEMs, owing to similar global strategy being followed, some like Lenovo might not have bought the idea of undergoing a complete overhaul in online selling business.

To be very honest, Amazon, Snapdeal and other e-commerce majors should not worry about the move, since they are the leaders in all the roles from selling to customer service management and have been the pioneers in the industry. Even if some manufacturers do end up going their own way, they will take some time to develop equity with their customers. Once implemented, it could mean higher profit margins for the OEMs and boost to the ‘Make in India’ campaign.

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