A large section of brick-and-mortar consumer electronics retailers in India have stopped selling Lenovo smartphones, protesting against the huge discounts and better models that the country’s third-largest smartphone maker allegedly offers online.
Neighbourhood mobile phone stores and electronics chains in major markets, including Mumbai, New Delhi, Kolkata, Pune, Nagpur, Hyderabad, Bengaluru and Bhubaneswar, have together decided to take this step. Even large and national retail chains have agreed not to stock Lenovo smartphones, three senior industry executives said.
“We have raised the issue with Lenovo and decided not to sell or push their models till they decide on uniform trade terms. This is unhealthy competition,” said a senior executive with the All India Mobile Retailers Association.
The retailers also want matters such as expensive spare parts and poor after-sales service resolved. Lenovo India declined to comment for this story. Lenovo wants to build the offline business for its smartphones, India managing director Rahul Agarwal told ET recently. He had said e-commerce contributes 75% of smartphone sales for Lenovo India and the company wants the share of offline trade to touch about 40%.
Industry executives said this once again sparks the war between offline and online retail in India, which has forced brands to develop uniform pricing strategies for both channels. A couple of years ago, Lenovo had opposed online discounting in India, a strategy that it now appears to have adopted. A senior AIMRA official said Lenovo recently offered a handset with different names and prices for online and offline channels, with the online model cheaper by Rs 2,000.
“They have also realised that if they want to gain share they have to focus on the Rs 15,000-plus segment, which sells mostly through offline trade. So we expect the company would soon come up with a strategy for offline trade too,” said the CEO of a leading mobile phone retail chain. The Lenovo-Motorola combine had an 11.4% share in India’s smartphone market, behind leader Samsung Electronics and Micromax Informatics, in October-December and also had become the second-largest 4G smartphone brand, according to Counterpoint Technology Market Research.