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Demonetisation: Smartphone sales fell 90 per cent initially, cheaper phones worst-hit

Among the sectors affected by demonetisation is that of feature phones and affordable smartphones that saw close to a 90% decline initially

By: Tech Desk | Updated: December 7, 2016 6:37:31 pm
Demonetisation, smartphone market decline in India, demonetisation impact on smartphones, feature phones, intex, demonetisation impact on smartphone market, Rs 500, Rs 1000, cashless payments, smartphone, technology, technology news Leading smartphone brands in India said online sales have fallen 20-25 per cent as most of the orders were cash on delivery

One of the sectors reeling from the impact of demonetisation is that of feature phones and affordable smartphones, which are priced under Rs 10,000. Since most of these purchases are made using cash payments even now, the initial impact was as high as 90 per cent.

Keshav Bansal, Director of Intex Technologies which is one of the top Indian smartphone brands, backs the government’s demonetisation move, but says sales fell by 90 per cent in the first week. “It has recovered and the dip is now about 60-70 per cent. We think it will take time to recover,” he told, adding that this quarter will have certainly show the impact. “The impact will be huge in the short term in terms of sale numbers. I do not see that recovering for at least three to four months,” he said, adding that the maximum hit has been on the feature phone segment and the Rs 4,000 to Rs 6,000 smartphones, all of which are purchased primarily using cash.

Manish Khatri of Mahesh Telecom, a Mumbai-based mobile phone retailer, echoed similar sentiments and said sales are picking up a bit now. “A majority of our business in the Rs 10,000 range is cash-based, and hence has been more affected by demonetisation. But slowly people have started using other medium of payments including PayTm and so it is recovering a bit,” he said, adding that those buying these affordable phones still like to pay by cash.

Khatri says feature phones buyers are essentially those in low-paying jobs who don’t have bank accounts. Also they were not well versed with technology. “Till the cash flow smoothens, the feature phone is going to be more affected than the mid-segment,” he said. At the moment, he says, only 10 per cent of the transaction are in cash.

The top executive of a leading smartphone brand in India said online sales have fallen 20-25 per cent as most of the orders were cash on delivery. “But the overall impact is lower than the industry for us. However, the supply chain has got impacted seriously as has the retail chain,” he said, refusing to be named.

Read: Paytm launches new payment method for users without Internet

The executive said the impact has also been regional for his brand, with some areas being hit more. He cautioned that right now it is also difficult to isolate the post-Diwali slump from demonetisation impact. However, according to him, it would be wrong to say the market has collapsed, and the things are likely to improve with each coming week. But overall the brand is unsure as to how much of the market will make a bounce back.

Meanwhile, Bansal also sees it as an opportunity since the move towards digital money will increase the penetration of mobile phones according to him. In fact, Intex has already launched a wallet of its own called Intex mRUPEE in collaboration with Tata mRUPEE.

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