The Economic Times daily newspaper is available online now.

    Online smartphone sales dip 18% in November on note ban, low demand

    Synopsis

    Flipkart, Snapdeal and Amazon said that cashless transactions have at least doubled over October, raising their proportion compared to that of cash purchases during the month.

    ET Bureau
    NEW DELHI: November sales of smartphone through e-commerce channels have dropped by nearly a fifth month-on-month due to the double whammy of demonetisation sucking up cash from the system and a demand slump after the festive season when most consumer purchases take place.

    Amid an overall sales dip, ecommerce majors Flipkart, Snapdeal and Amazon said that cashless transactions have at least doubled over October, raising their proportion compared to that of cash purchases during the month, as users switched to paying online, cards or through mobile wallets to fight off the cash crunch.

    Elevate Your Tech Prowess with High-Value Skill Courses

    Offering CollegeCourseWebsite
    MITMIT Technology Leadership and InnovationVisit
    IIT DelhiIITD Certificate Programme in Data Science & Machine LearningVisit
    IIM KozhikodeIIMK Advanced Data Science For ManagersVisit
    “As per our preliminary estimates, sales of smartphones in November through e-commerce channels declined by 18% monthon-month,” said Pavel Naiya, analyst at Counterpoint Research. “The share of smartphone sales online has also dropped to 34% in November, after having rising to 37% in October on the back of festive season purchases.”

    In the quarter ended September, about 31% of all smartphone sales were happening through online portals. While most of essential purchases in handset category last month was supported by EMI offers and schemes from online partners, analysts estimate smartphone sales through e-commerce channels in December to be remain flat or at best grow in single digits.

    Overall, Indian handset market shipments fell 26% in November from October, while smartphone shipments fell 23%, in the aftermath of the demonetisation of high value notes, Counterpoint said in a note.

    The resulting liquidity crunch led to consumers stalling or delaying purchases and inventory pile ups for phone makers.

    E-commerce players — for whom cash on delivery is the primary mode of sales — initially stopped taking cash on delivery payments, but quickly introduced payments by cards or mobile wallets, in order to spur demand online. In the offline segment, buy-now-pay-later and zero interest cost schemes were announced by players like Samsung and LG.

    “Cashless transactions have risen by 100% in November, driven by product categories such as phones, consumer electronics and apparel,” a Flipkart spokesperson said. The company said the ratio of pre-paid to cash on delivery orders has changed from 20:80 to now 40:60, across product categories.

    The change in split was similar for Snapdeal, which said that cash to prepaid ratio was close to a 50:50, but cash on delivery dropped to 30% of the total sales volume averaged out across categories. “The roll out of FreeCharge ‘wallet on delivery’ and cards on delivery boosted the prepaid volumes at Snapdeal,” a spokesperson said.
    The Economic Times

    Stories you might be interested in