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Lower online distribution costs help firms double share of sales in a yearto 30%
New Delhi, 23 April
The share of smartphone sales through e-commerce has risen from 15 per cent in 2014 to 30 per cent in 2015 because of lower online distribution costs.
The benefits are driving companies like Samsung, LG and Panasonic to focus on e-tail and analysts estimate the share of online sales will touch 35 per cent of the total by the end of this year.
Samsung has created a dedicated online team that looks after distribution, promotion and strategy. “We never had an online sales model till end-2015. But now we expect revenue from online sales to grow fast,” a company executive said. Samsung has launched a few online-only smartphone models like the J3 and On series.
“We have chalked out significant investments towards digital marketing. Our online sales are about 12 per cent of total sales and we expect to reach 20 per cent by the end of 2016-17,” saidPankaj Rana, business head, mobility division, Panasonic India.
LG is in the talks with e-com-merce players like Flipkart and Amazon to start selling online. It does not distribute through such platforms now, according to Niladri Datta, head of corporate marketing, LG Electronics India. “Last year, online sales soared due to new entrants like Xiaomi and LeEco,” said Tarun Pathak, telecom analyst at Counterpoint Research. “In 2016, we are expecting some correction as they turn their focus offline,” he added.
Apple, Xiaomi and LeEco have applied for permission to open single-brand retail outlets. Xiaomi now sells 90 per cent of its smartphones online. The company planned to increase the share of offline sales to 30 per cent in a few years, said Manu Jain, head of India operations, Xiaomi.
“With growing Internet penetration, our online sales now form 25 per cent of the total. In 2014, online’s share was 15 per cent,” said Shashin Devsare, executive director, Karbonn Mobiles. Micromax’s online sales, too, are over 25 per cent of the total.