Mobile phone retailers, brick and mortar shops, would be the biggest category to be hit badly by the spate of ‘predatory pricing’ sales generated on online platforms such as Flipkart, Snapdeal and Amazon.
By Subhash Narayan
Already sales at most outlets, either at local neighbourhood stores, or at organised stores such as one by Spice, has seen as much as 50% drop in sales this festive season. And this is set to become worse with increased number of mobile phone launches happening on online platforms. Also smartphone makers are increasingly using these platforms to offer maximum discounts to customers.
“While e-tailers would continue to remain small players in $525 billion retail market in the country, certain segments such as mobile phone retail may take a hit sooner than expected. Already a lot of sales in this category is shifting to the online platform and this would only get intense in coming days,” said Arvind Sighal chairman of retail and advisory firm Technopak.
As per estimates, mobile phone retailers form part of just a fraction of 16 million retailers in the country. All of them are already feeling the heat with some, already exploring alternate business strategies or looking at new retail channels.
“Our sales are down drastically this festive season thanks to the kind of campaigns being run on online platforms. One-third of our sales were undertaken during the festive season and slow progress this year means that our revenue stream would be severely constrained,” said a Anand Kumar, a local mobile phone retailer running a shop in South Delhi.
People like Kumar have already started looking at alternate businesses for survival and are exploring opportunities in retailing garments or taking dealerships of white goods.
According to Technopak, the expected loss of business among phone retailers is not really shocking as this has been happening in several other segments in the past few years. The penetration of technology has already changed how business is conducted in the tour and travel segment and car rental business.
Apart from mobiles, a host of small electronic items, shoes, watches etc could also see a large part of their sales going to online retailers.
“But traditional retail would continue to remain dominant segment in the country even by 2020 when we expect the retail market in India to grow to close to $1 trillion while online retail would just be fraction of this number,” Singhal said.