apple: Discount scheme upsets the Apple cart for retailers in India

Apple retailers across India are battling the company over its demand-creation plans for the iPhone. These are on the iPhone 14 and iPhone 14 Plus models and the older iPhone 12 and iPhone 13 models, according to the seller. This plan will continue for the next few weeks.

Retailers say Apple is forcing them to pay part of the discount (800 rupees per device) out of their own pockets. Additionally, the company has not compensated retailers for discounts on older inventory that retailers stocked at high rates in December.

Apple didn’t respond to ET’s question until press time.

But industry executives familiar with Apple’s practices downplayed the crack, saying it was limited to a handful of retailers, and most welcomed the proposal. He said he had been given advance notice and enough time in December to liquidate the old inventory.

But retailers say complaints are widespread. The All India Mobile Retailers Association (AIMRA), which represents 150,000 mobile retailers, and the Association of South India Organized Retailers (SIORA), a group of 16 including Poorvika and Sangeetha Mobiles with over 3,000 outlets, have weighed in on the issue. I am writing to the company. ET confirmed both letters.

Organized retail chains earn around 7% profit margins from selling iPhones to consumers. In general trading, margins will be as low as about 4%, said TS Sridhar, his SIORA president.

In a letter to Apple India in late December, SIORA said, “Members should also understand that they will not be compensated for the inventory they previously held.”

‘Contrary to industry practice’

Sridhar said Apple has communicated through its distributors that some of the discount must be borne by the retailer and that there is no compensation for old inventory selected based on old pricing.

SIORA said merchants would face “huge financial losses” as a result. This is against industry practice, he added.Other brands regularly compensate retailers for price cuts on their phones.

Similarly, AIMRA’s Jan. 6 letter to Apple states that the company’s distributors told retailers, “Even if we knew future prices, future inventory shortages, goal achievements, code blocking We are forced to stock units beyond capacity under the pretext of such as.” Markdowns on products that don’t qualify for discounts on inventory lying on the floor cost the retail industry a lot of money. ”

In protest, several retailers have asked Apple distributors to take back old inventory and recharge at new prices. However, the distributor states that there is no return policy for inventory once billed.

“Apple notified partners more than three weeks in advance to clear floor inventory, and even upset partners agreed to the plan,” said an industry executive aware of Apple’s policy. Such demand-creation plans are meant to compensate for low prices by increasing volumes, and it makes sense, the people said.

However, Sridhar said Apple informally informed them of the scheme only on Dec. 21, 10 days before it went into effect.

Apple’s December sales were especially strong in southern states, according to Market Tracker, which should have given partners an opportunity to clear existing inventories. There is also a harvest festival in January, and sales are said to be brisk.

Apple iPhone shipments reached record levels during the holiday season, when the company offered discounts on older models such as the iPhone 12 and 13. The iPhone 13 was the best-selling September quarter, according to Counterpoint Research. It was my smartphone. Through sales, Apple has been able to expand his market share to 5%, and in the premium segment he boasts the top share of 40%.

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