• Ajay Sharma

The Real(me) Downfall!

The Real data for the first two months of Q4 (October and November) is just out. And, there are various articles, discussions and opinions being shared on various platforms on the steep decline (volume-wise) in Realme’s market share.

I have also been asked for my opinion, and while I have responded in bits and pieces, I’d like to take you through the projections I’d made in one of my previous blogs wherein I’d written about the brand projections for Q3. Should you like to read the whole article, you can always read it here < https://www.sharmaajay.com/home/brands-projection-for-q3-2019>, but it’s important that you get a wraparound the Q3 projections <mentioned below>, before we proceed, as it sets base for the Q4 figures/shares. And, hence, my Real opinion on the brand’s state.

Note: All figures based on IDC.

The highlights from the previous blog, as mentioned earlier, are as under. Lookout for the italicised text to understand the comparison I’ve drawn to the actual IDC figures and what I’d projected.

1. A growth of 15-20% in the market. The reported figure was 26.5%. Please see * for the explanation of the big gap.

2. Not much change in the market shares for brands except that they could be skewed as the figures are based on shipment data. The market share figures were slightly different for all brands except Realme where the share reported was much higher. This was an anomaly arising majorly out of my point 3 below.

3. Excessive or low imports could make the market share go higher or lower respectively. It did specially for Realme where the imports, it seems, were excessive, pushing the market share beyond what was projected.

4. #Xiaomi would stay at No. 1. It seems to be, based on the trend.

5. #Samsung at No. 2 with the gap between Xiaomi and Samsung decreasing marginally. Samsung remains at No. 2. The gap would remain the same or narrow down when we see the final figures for Q4.

6. #Vivo gaining by 1-2% points. It seems to be, based on the trend.

7. #Oppo holding on to its share. It seems to be, based on the trend.

8. #Realme gaining over Q2 but being below the double digits’ figure in terms of market share. Realme grew from a 7.7% market share in Q2 to 14.3% in Q3 – from 2.8 million phones in Q2 to 6.7 million phones in Q3. This was way beyond what was projected by me and did surprise me. However, I knew it would reflect in the figures for Q4 and average out to what I had projected. I have already covered the reason in my point no. 3 above.

*This 6.5-11.5% over my projection alone is a major contributor to the inventory pile up leading to high carry forward inventories for Q4 and thus the low shipments in October and November – affecting the market share of Realme and the overall numbers of Q4 when they get reported. Please do bear in mind that Q3 shipment figures were 46.6 million and a difference of 6.5%-11.5% means a lot.

I think Realme took the hit as their sales in Q3 seem to have been too low as compared to the shipments they got. Imagine growing from a base of 2.8 million in the previous quarter to 6.7 million in the next quarter – a growth of 139% when the overall market grew by 26.5%. Brand growing by 5X of the industry growth in a highly competitive industry is not practical specially when the brand relies heavily on online business. It was unreasonable expectations, bad planning, lack of strategy or the desire to prove a point going wrong, it is best known to them!

It is also from here that I feel Xiaomi and Samsung gained in Q4 as they may not have carried much inventory from Q3 thus holding reasonable shipments in Q4 with offline for Xiaomi and online for Samsung giving the necessary buffer.

Now over to the post Q3 period. As of now the data available is only for the first two months of Q4 i.e. October and November, and the trends are in the table below with Xiaomi, Samsung and Vivo gaining, Oppo holding and Realme crashing.













Since Q3 was a very strong online quarter with 45% of the sales coming from there, it is also interesting to see the chart below.











Samsung trending higher can also be attributed to its increase in the online contribution to close to 3 times of what it was at the beginning of Q3. Xiaomi has also shown some increase after a three month consecutive decline in Q3. Xiaomi’s and Samsung’s gain is primarily Realme’s loss in its main channel which is online.

Is the loss in online share and the high carry forward inventory the reason for Realme being the first company to agree to online offline parity? Recover losses of online from offline as online will not buy Q3 models which need to be cleared? I believe they are also facing challenges offline with more trading than consumption which may affect their position in Q4, 2019 and possibly Q1, 2020.

At the end of every quarter each brand is talking about rankings, market shares, growth in volumes etc. I still remember Realme talking about a growth in triple or four digits over Q3 2018 when Q3 2019 figures got published. Will they talk about the huge decline now? They said they will sell 15 million phones in India (??) in 2019 and are targeting double of tha