Indian physical retailers vexed by trade margin cuts by Vivo & Oppo
The brick-and-mortar stores in India, which propelled the rise of the Chinese smartphone makers Oppo and Vivo, are now disgruntled by the companies. The physical retailers are reportedly displeased by the recent cuts to the trade margins by the two manufacturers and a number of stores have even stopped selling Oppo and Vivo smartphones.
According to a report in The Economic Times, Oppo and Vivo recently cut the trade margins by over 40%, leading the loss of over 10,000 stores each. To put the number in perspective, both companies had around 70,000 physical stores selling their phones before the margin cut.
It isn’t just the neighbourhood shops that are vexed by the reduced margins, even the big retail chains like Sangeetha Mobiles, Hotspot, Poorvika, and Mobiliti World don’t like the revised margins. The chains have either stopped the sales of Oppo and Vivo phones or reduced the focus on them.
It is a known fact that physical retailers in the small towns and tier two-three cities often pushed the consumers to buy the phones from these two companies because of the hefty margins. Now that these margins are gone, they have no incentive to make the extra effort. Unless there is some sort of compromise in the next few weeks, the smartphone sales numbers for the next couple of quarters will be interesting to see. The two companies together account of over 17% of the total smartphone market share in the country.
Although Oppo acknowledged the reduced margins and drop in the number of physical stores, Vivo denied any decrease in the number of brick-and-mortar stores selling their phones.
The troubles of Vivo and Oppo might end up helping Xiaomi, which has started focussing on the offline retail over the last few quarters and often ended up taking the brunt of the extra sales push for Vivo and Oppo by the retailers.
Image Credit: Sandip Mobiles/ Just Dial