“We have partnered with Flipkart for the global launch of our F series and Flipkart Smart Upgrade upgrade, which is powered by our Galaxy Forever platform. With these, we are looking at a strong festive business this year,” Asim Warsi, Senior Vice President, Samsung India told ET. “We will close the second half in excess of 100% growth in the online channel and a large part of this growth will be driven by F41 and M series.”
The aggressive online strategy is unfolding at a time when Samsung’s offline retailers have accused the Korean brand of driving online sales at the cost of offline business. AIMRA recently said that it is not maintaining price parity and using their offline data and leads to generate online business with the help of discounts and offers.
With the trade-in program, India’s second largest smartphone brand is looking to bring the upfront cost of a smartphone down, and to drive sales. Samsung is planning to extend the trade-in program to more smartphone models and e-commerce platforms.
“Consumers will now have the choice to upgrade faster. It gives them flexibility…Consumers want to stay up to date with latest technology but very often affordability is a hindrance. This program will allow them to shift to new tech by paying 30% less,” Warsi said.
Samsung has been scaling up its online presence lately. During the first half of 2020, 35% of Samsung sales is coming from online channels as compared to 25% last year, as per Counterpoint Research analysis. It became the second largest brand in Q2 2020 with 26% volume market share, up from 16% during the first quarter of 2020, as per Counterpoint. Samsung was the second largest online smartphone brand in Q2 with 25%, up from 11% in 2019.
As per IDC, the online channel accounted for 39% of Samsung’s shipment from 20% a year ago in the second quarter of 2020.
“As India moves toward second or third smartphone users, the mix of the mid tier portfolio in the installed base will increase and upgrade will very much dependent on the realised trade value of the device.This is a bigger trend for the industry which very few players are realising and Samsung is likely to leverage that and hence trade should help them to keep certain users within Samsung portfolio, given the highest share of Installed base Samsung has in India and higher ASP devices,” Tarun pathak, associate director at Counterpoint said.
“Our pre owned device analysis shows that Samsung, Apple and OnePlus are only brands that can command good prices after one year,” he added.
Upasana Joshi, associate research manager, Client Devices, IDC India said that trade in programs ensures better and attractive pricing of new models by giving upfront discounts), stickiness to the brand/channel for a longer time and lowering refresh cycle thus providing latest specs to customers. “However, partnering with a channel for trade in programs will require equally attractive schemes similar to buyback schemes, along with apt pricing for the new device (clubbed with discount, loyalty bonus etc) over a period of time,” she added.
Ahead of the festive season, the company has already expanded its M-series with the launch of M51, which will be priced in the sub- Rs 30,000 category. It is now launching the F41 smartphone in the $200-250 price category. “The global first launch of the Galaxy F Series will target young online shoppers who are intense users of technology and are seeking affordable phones,” Warsi said.
Joshi said that launching new exclusive online F series is an aggressive move especially just before the festive quarter starts to gain momentum. “This is expected to garner volumes for Samsung, provided models are priced aggressively along with attractive feature sets to compete offerings in low and low mid segment by other brands on Flipkart and smooth supply of devices.”
Also, after the COVID_19 impact, the contribution of online channels has constantly increased in the previous few months owing to cautious consumers fearing to step out to offline retail counters. India’s online channel has a duopoly of Amazon and Flipkart for the smartphone category.
The company recently said that it was aiming to achieve $3.5 billion gross merchandise value (GMV) for our M-series of smartphones from launch in 2019 to end 2020.
Samsung is also targeting 10% sales from its own e-commerce channel, driven by various programs launched by the company including buyback scheme, student offers and referral program.
The launch trade-in programs like Flipkart Smart Upgrade trade will make the refurbished market organised and bring a structure to it, Warsi said.
“Second hand devices and trade in are part of the market since day one. However, lately more organised platforms and programs are developed, giving consumers realtime transparency with the help of technology and structure. It is the first time that an organised online trade-in program like this is locally available,” Warsi said.
Under the latest program, users can own a Galaxy F41 by paying just 70% and after 12 months, they can either pay 30% residual value or return the smartphone. In the offline channel, Samsung’s local retail partners work with aggregators that take care for refurbished phones, Warsi said.
“Our strategic partnership with Samsung reinforces our commitment to make the latest in technology accessible to over 250 million customers across Bharat, during a time when smartphones are bringing immense value to people’s lives,” Kalyan Krishnamurthy, CEO, Flipkart Group, said.