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Apple is getting tougher on small retailers to keep discounts in check

The move comes shortly after the exit of three senior sales executives from Apple India in a massive rejig of how things will be going forward.

  • Published: July 16, 2018 11:31 AM IST
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After the exit of three senior sales executives from Apple India, the company is now getting tough on small retailers in an effort to normalize pricing of its products in India. Apple‘s latest move will involve blacklisting and cutting off supply to small retailers that pick up supply from wholesalers and sell at a discount. Apple’s new India chief Michael Coulomb is taking steps to change Apple’s pricing and sales strategies in India, even as Apple is struggling with sales in India, the world’s second largest smartphone market.

Apple is also likely to reduce the number of distributors for the company’s products from five to two, retaining only Redington and Ingram Micro as its distributors from April 2019 onwards. This, as well as the restrictions against small neighborhood retailers, are all part of an effort to ensure that pricing remains standard, as Apple seeks to control discounts and pricing schemes being offered on its products. Going forward, Apple’s smartphones and laptops are likely to be sold only at MRP, with limited offers such as card cashbacks and no-cost EMI schemes being used to provide value to buyers.

Recent years have seen big discounts being offered on Apple smartphones and laptops by various small retailers, as the previous India chief Sanjay Kaul relied on these methods to increase product adoption in India. However, the new regime at Apple believes that this was diluting the brand’s image in the country, which is particularly price conscious. While the aggressive discounts may have put more iPhones in the hands of consumers, Apple will adopt a strategy of larger margins and premium-only positioning on its devices going forward.

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The move will affect small retailers heavily, as they will no longer be able to sell Apple phones at prices lower than official channels. This could affect sales, as buyers will likely prefer established stores over neighborhood retailers in the absence of any price benefit. Apple wants its products to only be sold though larger stores and Apple Premium Resellers, since these stores are able to offer a more complete sales experience and properly cater to customers requirements.

Apple’s market share hasn’t grown over the past few years, maintaining at around 2-3 percent, despite the heavy discounts being offered. Apple has also been seeing increasing competition in the premium smartphone segment, with many buyers preferring brands such as Samsung, Google and OnePlus, and the Android platform in general.

 

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  • Published Date: July 16, 2018 11:31 AM IST