Rejig in sales strategy: Ecommerce discounts on iPhones may soon be over

KOLKATA: Ecommerce discounts on iPhones may soon come to an end following a sales shakeup by new country boss Michel Coulomb, said people with knowledge of the matter.

Apple India has more than halved distributor margins to 1.7-2.5% and given distributors specific areas of responsibility to protect those margins. Before this they were free to sell to any trade partner, which meant stock could be sold at a discount online by giving up some of those fatter margins.

Three senior industry executives said the iPhone maker has also increased margins for the exclusive franchise-run Apple stores in the country from 4-5% to 5-7% to build the offline channel and prepare the market for company-owned stores, which are likely to open sometime in the 2020-21calendar years, they said.


Coulomb took charge last month after the departure of Sanjay Kaul amid slowing growth in sales. “Coloumb is known for systems and processes and wants to bring discipline into the company’s sales operation,” said one of those cited above. “He has met key trade partners since taking charge.”

New Mandate to Distributors
“The strategy is to increase sales from Apple brand stores in the country and stop indiscriminate online discounting which distorts brand image,” added the person.

Apple India didn’t respond to queries. Online sales account for a little more than half of all iPhones sold in the country thanks to periodic discounts offered on marketplaces such as Amazon, Flipkart and Paytm Mall. That’s in contrast with the overall Indian smartphone market, in which ecommerce accounts for a third of all sales.

Apple has mandated its five distributors — Ingram Micro, Redington, Rashi Peripherals, Brightstar and HCL Infosystems — to manage sales in specific territories and with trade partners. For instance, HCL will focus on B2B sales while Ingram Micro will be responsible for managing sales to modern retail and Apple franchise stores. Brightstar will largely focus on neighbourhood cellphone stores.

“Apple will not directly control price since it is against policy,” said one of those cited above. “However, these efforts will tame online discounts once the existing stock gets sold out and will bring channel hygiene. It may also rope in another distributor in India.” Apple’s dominance in the premium smartphone segment in India is under stress from brands such as OnePlus, Xiaomi, Oppo, Vivo and Motorola launching models in the Rs 20,000-plus segment.

According to market tracker Counterpoint Research, the Rs 30,000-plus smartphone segment grew 20% in 2017 over the previous calendar year, led by OnePlus, Apple and Samsung.