Android One

Some of the leading retail outlets in India, including Tata Group’s Croma, Future Group, Planet M, Next, Reliance Retail and Sangeetha Mobiles among others have decided to not sell Android One handsets in protest of Google’s decision to initially launch the handsets through e-commerce platforms only, reports The Economic Times.

Google launched the first set of low-cost smartphones through its Android One initiative in September this year, in partnership with Indian handset manufacturers Micromax, Karbonn & Spice. The companies had tied-up with separate e-commerce platforms for the launch: Micromax with Amazon India, Karbonn with Snapdeal & Spice with Flipkart.

Apparently, sales through these online retailers were below expected levels which led to the handset companies approaching offline retail outlets. That’s when the retail outlets refused to stock and sell Android One handsets.

The ET report says only The MobileStore & Univercell are selling the Karbonn smartphone, but even they are expected to take a call on continuing selling it and stocking the other two smartphones within the next two weeks as sales have been disappointing.

Increased focus on online-online distribution

This comes at a time when handset manufacturers are increasingly focusing on online-only distribution models. Earlier this month, Micromax revealed that it would be launching an online-only brand YU. The first smartphone under this brand is expected to be launched in December this year. Chinese smartphone maker Xiaomi had also adopted the online-only distribution model for its Mi series of affordable smartphones. In fact, it’s flash sales-based marketing strategy has succeeded in attracting a lot of attention (both positive & negative) towards the brand. Motorola had also adopted a similar distribution model for its Moto G series of smartphones, earlier this year. While Finnish smartphone maker Jolla also launched its smartphone exclusively through Snapdeal.

Our Take

In case of both Xiaomi & Motorola an online-only model makes sense, as they are focusing on establishing brand identity and not sales. Xiaomi has just entered the Indian market, while Motorola re-entered India after a gap of 2 years. But for home-grown handset manufacturers like Micromax & Karbonn ignoring offline retailers would be a mistake.

Micromax holds a 18% market share in the Indian smartphone market (as of Q2 2014), second only to Samsung which has a market share of 29%, according to an IDC report. Karbonn was placed third with a market share of 8%. So, Micromax and Karbonn have more to lose by adopting an online-only distribution model.