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  • Writer's pictureAjay Sharma

Is offline business really affected by online?

There are various agencies which track shipment/sales of mobile phones by brands for each quarter - #Countertoint, #CMR, #TecARC, #IDC, #GFK. The figures by all can sometimes be very different. It is either good to follow one through the year or use them as indicators rather than absolute numbers. Well, that is the prerogative of subscribers.

I have been hearing a lot about the offline channel getting hit badly by online specially in October and early November. The data from Counterpoint, CMR and TecARC and all point to that. How badly is the question!

Let me take Counterpoint as base and use others and market feedback as indicators, and this is what is the outcome.

1. Overall online business in 2018 is expected to grow to 50 million an 11% increase over last year from 45 million.

2. Online contribution to increase with entry of #Realme and the increase focus of #Honor online as well as launch of online exclusive models, discounts, financing options etc.. Counterpoint says it should go upto 38% this year from 33% last year.

3. Online expected to grow by 51% in OND. Even offline expected to grow by 11%. I guess now that the online blitzkrieg is over, offline sales should pick up in the coming days and months and make up for the sales losses in October and early November to some extent. Time for Offline to be ready.

Going back to the issue on whether online is indeed affected by offline, data and market voice says it has. The figures from one agency say it has, from another say it has grown.

My personal opinion is that technically offline has grown. The only change is that while the bigger retailers and chain stores buy from the proper distribution channel and have been impacted, the smaller ones are buying from online at prices cheaper than offline distributors and selling offline without charging any premium.

While there is no data available on this, the figure could be anything between 40-50%. so it is actually offline sales.

That seems to have been the deciding factor in the offline strategy of #Xiaomi's of initially going without any traditional marketing or discount or support as they operate on thin margins. That is what Realme is banking on now when they are planning to go offline after their success online.

It is time for the brands and the online platforms to come up with checks and balances to stop this to be fair. Brands because they are impacting their own offline distributors. Platforms as they are making losses already and by encouraging this while they gain on sales, are bleeding. After all they are also responsible to the investors for an ROI, and the government. With continued losses in their books there are no taxes to be paid.

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Nov 29, 2018

Insightful! Good analysis. So some sales are actually distributed on-line but are actually off-line to the final customer!

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