India's smartphone shipments fall in Q2 - and still breaches a record

India's smartphone shipments nosedived by 51% during the second quarter of 2020 compared to numbers achieved a year ago. The reasons were obvious - zero sales during April and most of May. However, pent up demand saw sales spurt during June to pre-lockdown levels as total shipments during Q2 reached 37 million units, a growth over the same period of 2019. 

Reporting the numbers Counterpoint Research's Market Monitor service said this spurt during June was driven by new launches, price cuts on older devices and channel expansion across brands. The anti-China sentiment too had an impact as contribution of Chinese brands fell to 71% in the quarter compared to 81% from the January to March period of 2020.  

An earlier research conducted by Canalys reported that shipments fell by as much as 48% during the second quarter of 2020 compared to the same period a year ago, the biggest that a growing market has seen in a decade. 

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Stuttering supply from China

However, Shilpi Jain, Research Analyst at Counterpoint, says the decline was mainly due to the mixture of stuttering supply for some major Chinese brands such as Oppo, Vivo and Realme, and growing anti-China sentiment that was compounded by stringent actions taken by the government to ban more than 50 apps of Chinese origin and delay the import of goods from China amid extra scrutiny. This all resulted from the India-China border dispute during June."

In June, smartphone shipments declined by a marginal 0.3% year-on-year largely due to the pent up demand as well as a push from brands. Due to concerns over potential COVID-19 infection, consumers preferred contactless purchasing and online channels. Smartphone brands also recognized this trend by pushing more inventory to online channels.

“Online channel share reached the highest ever level, accounting for almost 45% of sales, a second-quarter record. Consumers preferred contactless purchases and social distancing.” the report said. 

A shift in sales strategy and price band

The report said that brands which focused on offline channels expanded to online channels with online-exclusive series. Similarly, brands which entered the market with online-exclusive series expanded their reach towards offline channels by forming partnerships with key offline retailers. This strategy worked well for all the leading at-scale players. 

Another interesting development that Counterpoint analysis revealed is the shift in India's sweet spot for customers in terms of pricing which moved to Rs.10,000-20,000, and is expected to be the largest contributor during the rest of the year. This, however, is not stopping brands from adding flagship models with specs such as notch display, full-screen view, multiple rear cameras and pop-up selfie cameras.

Xiaomi rules the roost, OnePlus gains

In the pecking order of brands, China's Xiaomi continued to lead the Indian smartphone market in the second quarter, thanks to the Redmi models. However, Samsung showed signs of major recovery, almost reaching 95% of its pre-lockdown sales, to take the second place, with a market share of 26%, up from 16% in the previous quarter. Realme too made its presence though it is more likely that its numbers may show up in the third quarter. 

Another major shift happened at the top of the premium segment (costing more than Rs.30,000) where OnePlus wrested the top slot, thanks to its recent OnePlus 8 series launches. However, it was Apple once again leading the ultra-premium segment (above Rs.45,000) as iPhone 11 was the top seller, in spite of losing some ground to the OnePlus 8 Pro during June.  

The report predicted that huge opportunities lay ahead for India to become a manufacturing and export hub for handsets due to the strong push from the federal government which launched new schemes to attract OEMs to set up production bases in the country. Recent reports about Apple starting to manufacture the iPhone 11 from India and its partners Foxconn and Pegatron seeking to increase production capacity should augur well for India's smartphone market. 

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