Smartphone brands shift focus to offline sales in smaller towns

Smartphone brands are increasingly pivoting to offline channels, tapping into smaller towns with easier access to financing in a bid to sell more premium handsets, marking a notable departure from ecommerce platforms.

Shipments to online retailers fell for the seventh consecutive month in April. This was largely due to online-centric brands making a sharp shift towards offline distribution, said market trackers.

“Online channel shipments faced double digit declines for the second consecutive month. In April, it declined by more than 20%. Meanwhile offline channels have grown by more than 10%, marking the eighth consecutive month of growth for offline, which also faced headwinds of low overall demand,” said Upasana Joshi, research manager, IDC India.

Joshi said overall shipments were flat at around 12 million in April, compared to March, reflecting another flat quarter for the smartphone market.

According to IDC, nearly all brands are implementing an omnichannel strategy, expanding into smaller towns/cities, offering attractive channel margins and support, which should sustain in the coming quarters.

Lower appeal for online sales has made nearly every brand reduce volumes to online channels, including those earlier heavily reliant on ecommerce for distribution.

For instance, Motorola reduced shipments to online channels to 64% in Q1 2025 from 82% a year earlier. For OnePlus, the figure fell to 71% from 85% in the same period, according to market researcher Canalys.

Xiaomi, which started its Indian venture selling through ecommerce flash sales, currently garners 39% of its volumes through ecommerce, compared to 45% in Q1 2024, Canalys data showed.

"Over the last one and half years, Xiaomi has pivoted from being an online-centric brand to taking an omnichannel strategy which aims to provide a unified experience to the consumer, ensuring the same product, same price, across every touchpoint," Sudhin Mathur, chief operating officer, Xiaomi India, told ET.

Market trackers said brands are realising that ecommerce penetration in India has hit a plateau, with a majority of the country still catered to by brick-and-mortar stores, despite online channels helping brands reach remote locations. Spike in online sales during the pandemic has not sustained as consumer behaviour in rural areas is slow in transition.

According to Canalys, the share of online sales of smartphones fell to 36% in Q1 2025 from 45% a year earlier. It said brands are relying on retail and distribution networks to drive sales.

“Channel schemes, offline activations, and tighter sell-out coordination will again define share gains,” said Sanyam Chaurasia, analyst at Canalys. He added that increased competition in designs and specifications are pushing brands towards showcasing products in offline stores where paper financing is also much easier.

Tarun Pathak, research director, Counterpoint Research said the lure of consumers towards online channels came due to easier availability, deep discounts, and exclusive launches. Most consumers were also not spending more than Rs 10,000-15,000 on handsets.

With offline channels now seeing more price parity, and more bundled offers, along with easier access to financing, consumers are increasingly veering towards it, especially for high-end models, he said.