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Battle for Offline business intensifies

Formerly online-only smartphone makers like Xiaomi and Realme are shifting their focus offline, taking on established rivals 

Published: 16th June 2019 09:12 AM  |   Last Updated: 16th June 2019 09:12 AM   |  A+A-

amit bandre

India’s e-commerce market might be soaring as far as smartphone sales are concerned, but a rather intense battle is shaping up in the less-glamorous offline sales channel. While market leader Xiaomi entered the race as an exclusively online player, a shift in strategy over the last two years have seen it gather substantial momentum in the offline sales channel too. And, competitors like Samsung and Oppo, with quite beefy offline networks, will have to gear up for a challenge which is unlikely to offer any party an easy ride. 

For instance, a recent report from market analyst firm Counterpoint Research notes that while overall smartphone shipments grew at around 4 per cent in the first three months of 2019, the quarter saw a significant push in the offline channel. “This quarter we have seen all major brands expanding their footprint in offline channels to gain market share.

Xiaomi has laid out big plans for offline expansion by increasing its number of retail stores (Mi Preferred Partners), Mi Homes, and Mi Stores specifically to target smaller towns. Realme, which started as an online-only brand, now gets the majority of its sales from offline channels. OnePlus is also now increasing its offline points of sale by launching exclusive stores across key cities,” said Anshika Jain, Research Analyst at Counterpoint Research. 

The battle for market space in the offline segment, where initially online-only firms like Xiaomi and Realme are taking on established players, is being reflected in the online segment, where offline heavyweights like Samsung, Vivo and Oppo are making their own incursions with a series of exclusively-online launches. For instance, Q1 of 2019 saw Samsung adopting an online flash sales strategy for the first time with Amazon on the Galaxy M10 and M20 models. “(This) increased Samsung’s online share to 15 per cent in Q1 2019 with 31 per cent year-on-year growth in the online segment. The initial demand for M series was strong due to which Samsung’s online contribution within its portfolio reached its highest ever level,” noted Counterpoint. 

In fact, the onslaught on Xiaomi’s online dominance has been quite successful if the Chinese firm’s market share is anything to go by. Counterpoint says that Xiaomi’s market share in the online smartphone segment has fallen steeply from a dominant 57 per cent in Q1 of 2018 to 43 per cent in Q1 of 2019. This has been accompanied by a rise in the market share of players like Samsung.

“Offline expansion is a key strategy for the growth of these players. Having said that we believe that the online channel will continue to hold significant importance in a price-conscious market like India,” said Tarun Pathak, Associate Director, Counterpoint. As for the overall smartphone market, Xiaomi remains the undisputed leader, with a 29 per cent share in Q1 of 2019. However, this is a fall from the 31 per cent it held in Q1 of 2018. The period also saw Vivo and Oppo add to their own market shares in India. 

Xiaomi online market share falls
Counterpoint Research says that Xiaomi’s market share in the online smartphone segment has fallen steeply from a dominant 57 per cent in Q1 of 2018 to 43 per cent in Q1 of 2019. This has been accompanied by a rise in the market share of offline-heavy players like Samsung.

Xiaomi online market share falls
Counterpoint Research says that Xiaomi’s market share in the online smartphone segment has fallen steeply from a dominant 57 per cent in Q1 of 2018 to 43 per cent in Q1 of 2019. This has been accompanied by a rise in the market share of offline-heavy players like Samsung.

Xiaomi stays overall market leader

Xiaomi commanded a 29 per cent market share in Q1 of 2019

However, this is a fall from the 31 per cent it held in the same period  of 2018

The period also saw Vivo and Oppo add to their own market shares 

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