Sellers set to launch big discounts on smartphones to clear stock

Consumers can expect steep discounts on smartphones as brands, e-commerce platforms and major retailers prepare to roll out various schemes to clear out inventory accumulated in the first quarter of 2023, when sales fell by a record-breaking 16-20 per cent year-on-year (YoY), said an Economic Times (ET) report.

Companies are also trying to generate demand at a time when sales of entry-level and mid-range smartphone sales have been slow, said market trackers.

According to them, the majority of top brands including Xiaomi, Vivo, Apple, OnePlus and Realme are offering huge discounts on both new and older models.

Retailers told ET that brands have also arranged a clearance sale for outdated stocks that are close to being phased out by adopting permanent price reductions across conventional and online trade channels.

Counterpoint Research analyst Shilpi Jain claimed that summer discount sales are a way to clear out stocks that have accumulated since the second half of last year and the first quarter of 2023, laying the groundwork for the push of fresh stocks ahead of the festive season.

She said that channel partners continue to be cautious when purchasing additional stocks of smartphones. Therefore, rather than focusing on new inventory, brands and channels are now trying to clear out the existing inventory.

“If not, it will have a significant impact on the festive season sales,” she said.

Consumers have started to hold off on buying new smartphones until the clearance sales, said Jain, adding that sales have increased as channel partners have become aware of this behaviour.

“When I spoke to ecommerce players recently, their entire team was busy getting ready for these summer sales,” she said.

“Such a thing was mostly seen during the festive season sales. Therefore, it (summer sales) is significant and important to them,” Jain added.

Meanwhile, market trackers reported that brands want to clear out their inventory before the festive shopping season in the second half of the year.

One-third of annual smartphone sales typically occur during the festive season, which is typically from August to October.

According to industry experts, brands are also hoping to capitalise on consumer optimism surrounding the upcoming Cricket World Cup in India in October and November as well as some significant state elections that will be followed by the elections in 2024.

Despite this, IDC India predicts that India’s smartphone market will, at best, remain flat YoY in 2023 after experiencing a 10 per cent decline in 2022 due to persistently weak demand for the high-volume, entry-level segment for the second year in a row.

For now, smartphone manufacturers are attempting to boost demand by offering steep discounts.

This comes at a time when shipments to online channels have dropped significantly even as the share of offline channels grew.

According to Counterpoint Research, offline channels, which accounted for 56 per cent of shipments in the first quarter, are steadily increasing.

Faisal Kawoosa of TechArc attributed the rise in offline channel share to the increasing demand for premium smartphones. While consumers do their research about high-end devices online, most of them prefer to go to offline stores to get a touch and feel and get their queries answered before purchasing them from where they get the best deal, he said.