Mumbai: Tightening of the FDI policy in ecommerce could help Samsung wrest India’s top smartphone slot from Xiaomi because the South Korean company has a wider offline retail presence than its Chinese rival, which needs to scale up its brick-and-mortar store play rapidly, analysts said.
“This could be an opportunity for Samsung… Almost 70% of the market leader’s volumes come from online channels,” said Neil Shah, partner and research director, IoT, mobile and ecosystems, at Counterpoint Technology Market Research.
The government on Wednesday barred online marketplaces from signing exclusive deals for products on their platforms. It also directed that a single vendor can sell a maximum of 25% of its inventory on an ecommerce platform.
Analysts said the changed rules could hurt handset makers Xiaomi, OnePlus, Huawei’s Honor and RealMe, which are dependent on ecommerce sites such as Amazon and Flipkart for the bulk, if not all, of their sales.
Smartphone sales on ecommerce platforms outpaced those in brick-and-mortar stores this recent festive season, driven by discounts and cashback offers, which could disappear once the revised norms kick in on February 1.
“Samsung will gain over Xiaomi for a quarter once the new rule sets in. The Korean handset maker will be able to leverage its marketplace advantage till such time the Chinese company manages to expand its offline channels,” said Faisal Kawoosa, founder of techARC.
Xiaomi, with about 27% share, and second-ranked Samsung, with 23%, have dominated 2018 and are expected to continue their fight for the top slot in 2019.
Smartphones accounted for half of the total handset market in India during July-September, according to Counterpoint.
Analysts said that while Samsung will benefit from the latest rule changes, Xiaomi won’t give up its spot that easily as the Chinese company is also in the midst of expanding its offline presence aggressively.
According to Counterpoint, about two years ago, 5% of Xiaomi’s volumes came from offline channels, a segment that has grown to some 30% now. According to reports, the company has 500 Mi stores and aims to add 5,000 outlets by the end of 2019.
Source
