Not So Smart(phone) Data

There are many research agencies and all of them are churning out data related to the Indian #Smartphone Industry. Does this data they share truly reflect the market scenario? Not exactly. Let me try and share some hard facts.

The key data that most agencies report quarter-on-quarter is shipment data. If we compare the data from 5 different agencies for any quarter, but for the fact that the list of the top 5 brands remain unchanged, the overall shipment and hence the market share data is different for all 5. Even rankings, except for the No. 1 vary.

This raises many questions:

a. Which agency to rely on?

An easy solution for each brand is to pick-up and quote or publish the data which suits itself every quarter. But is that right? Technically no. But then, take the posts on Facebook or LinkedIn of some of the leading brands and you may see them using different agency data every quarter to show themselves as the best or amongst the best in a particular quarter and some other agency data in the coming quarters. So the brand is at liberty to use the agency data which suits them.

b. Why the difference?

In earlier times when mobiles phones were being imported as complete units, it was easy to get fairly accurate import data. With SKD/CKD becoming the norm, the tracking of the exact shipment data cannot be accurate due to multiple parts. Collating this data to arrive at an exact number may not be easy.

c. Is the shipment data a true reflection of the market share?

No and I will tell you why. Based on my experience the data is collated from various sources such as component imports, data from local assembling units, brands with some fine tuning by the research agency.

Also, a lot of the brands importing components to India, assemble the phones in India and then export from India. Who has the exact break-up of what was meant for India and what was not? When only 5 brands contribute to over 85% shipment share and the share % gap in brands between rank 2, 3, 4 is small, a slightly higher figure for one and a slightly lower figure for another could change rankings.

d. Is it right to use this data?

A particular brand may import heavily in one quarter and show a high share and then a decline in the next quarter when the imports go down due to high channel stocks. One can argue that it all evens out in the end, but the fact is that it could and does mislead the reader on the brand trajectory. Remember the case of crash of market share of #Realme in Q4 2020 vis a vis Q3 which was much talked about and interpreted as a brand faltering. Actually, it was this issue.

e. Which data would be ideal?

Consumption data/sell-out data or in real terms the brand handset additions on the network every month? Activations? Maybe… but there are issues here as well, as explained earlier.

f. Is the mainline and online share data accurate?

Again a no... if one goes by the last point of sales. With over 50% of the online sales being brought by some mainline retailers who ultimately sell the goods through their stores the data gets skewed more towards online. Assuming that the Online contribution is 48% and 50% of this is being bought not by actual customers but by offline directly by retailers or through intermediaries, the actual market share of online would fall to half! This purchase and sale of handsets from online by mainline has made the position of mainline retailers weak not only in terms of allocations based on contribution of the channel.

I get so many calls from wholesale markets specially for #Samsung, #Xiaomi and Realme for wholesaling of activated stocks and exports. In the case of one of these brands – as per my calculations – If one adjusts these third-party unofficial numbers which ultimately get exported, they would move a couple of rungs lower in the net shipment data and thus the ranking. This error would be least for #Oppo and #Vivo and they could gain in their rankings. They have much tighter controls on this aspect.

g. How accurate are the growth data figures for the two channels?

There are reports on the growth in mainline and online for each quarter which for some time has been showing a higher growth data for online. I agree that this is indeed the case, but the fact is as far as mainline is concerned, where is the sales data being collected from? The mainline is complaining of stock shortages and lesser walk-ins while agencies report growth. This raises some questions:

i. So are the agencies relying more on data from the organised trade which is run more professionally and which even I feel is growing. What about the Pop and Mom stores which are the backbone of the mainline in India? Which research agency has that kind of a bandwidth to collect fairly accurate data for mainline?

ii. Are the retailers being quoted for this growth the favoured ones?

iii. If mainline is growing, why are even preferred partners going non-exclusive?

I am making this statement as when I talk to retailers they complain of declining sales or marginal growths. Agencies on the other hand are reporting higher growths in mainline.

I have been in the industry for more than a decade now, more or less since smartphones came into being and having covered the whole of the country working with channel partners with different brands (most of them successes), I am approached by many for my opinion.

The idea of writing this blog was to share my thoughts on the existing shipment, market share and mainline/online share data being shared by agencies and its usage in decision making. Of course these agencies are all big and led by experts with years of experience, but then there is more than what meets the eye – at least on actual market shares and mainline/online shares.

Many of the queries raised by me above are known to all brands, but who wants to challenge it when it suits them specially things like exports which if accounted for can severely impact their share.

I had mentioned activation as one of the ways to capture the true sales of any brand. Unfortunately, today even activation figures will not give a true picture as to avoid penalties and to meet targets, some channel partners are activating handsets before wholesaling them.

What is happening at the ground level is best known to local guys including those of the brand, but then not all information specially that doesn’t suit the brand will be shared by them and that is where comes the requirement of an agency which has that reach or network.