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I want to know the number of phone distributors in India, the annual sales volume through their distribution channel to the unorganised retailers, and credit terms at which they provide credit to the unorganised retailers.
Hi! Thank you for your request to research the phone distribution industry in India and the credit terms they provide to unorganized retailers.
The short version is the unorganized retail market for smartphones in India account for 90% of sales. Smartphone distributors in India allow their retailers 7 to 15 days of credit terms, depending on the smartphone brand they are distributing.
Below you will find a deep dive of my research along with methodology and description of results.
METHODOLOGY
To answer your query my colleague and I searched for market research, distributor listings, and company reports about the smartphone distribution industry in India. We also looked at business articles as well as related forums to gain insights and supplement our findings. Please read on to see the results.
INDIA SMARTPHONE DISTRIBUTION FACTS
Business Standard featured a report by European International showing that total smartphone sales in India amounted to 102.4 million handsets in 2016. This figure is projected to more than double into 231.5 million smartphone sales by 2021. However the report did not differentiate numbers for distribution sales in its preview version. The paid version of the report offers information on "Distribution of Mobile Phones by Channel: % Volume 2011-2016" as well as "Distribution of Consumer Electronics by Channel: % Volume 2011-2016".
Ipsos Consulting tells us that "Traditionally handsets were sold through well known electronic stores in select cities. Now devices are available almost everywhere from high-street stores and supermarkets to small general shops in the suburbs. As a result, organised retailers only account for one-tenth of the mobile market." This means that the unorganized retail market for smartphones in India account for 90% of sales.
CREDIT TERMS
Though we searched extensively, we could not find any publicly available information on distributors' parameters for unorganized retailers' credit worthiness. A presentation by Vodafone regarding its distribution model shows that it categorizes retailers based on their quality of acquisition and revenue. Quality is determined by the retention and the average revenue per user (ARPU) of the customer acquired by the retailer. Another source that gives a peek to the inside dealings of smartphone distributors and retailers is this Quora discussion. Here Ankit Vijayvargia states that anyone who wants to secure an exclusive dealership for Chinese mobile phones needs to prove that they have the resources, qualifications, and experience.
This SlideShare presentation entitled "Distribution channel of Nokia in India" by Santhosh Madheswaran, an MBA at Jansons School of Business, presents some information about credit terms handed by smartphone distributors to their retailers.
According to Madheswaran, Nokia operates under quick delivery, quick payment terms with its dealers. While its margin and credit period agreement with HCLI Info distributors were never made public, it is speculated that a revenue sharing model based on total sales for a predetermined period is in place. Nokia also implements a very small credit period to its Re-distribution Stockist Suppliers (RDSS), which in turn put pressure on retailers. Nokia's RDSS are given a credit period of 7 days, which in turn allow retailers only 7 days credit period as well.
Madheswaran gives us information on the other brands as well. According to his presentation, Samsung and LG offer a credit period of 15 days, more than twice as long compared to Nokia. Also, Nokia offers 2% margin to its dealers compared to 10% offered by LG and 18% by Samsung.
CONCLUSION
To wrap it up, the unorganized retail market for smartphones in India account for 90% of sales. Though we did not find any publicly available information on distributors' parameters for unorganized retailers' credit worthiness, we found that smartphone distributors in India allow their retailers 7 to 15 days of credit terms, depending on the smartphone brand they are distributing.
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