November sales of smartphone through e-commerce channels have dropped by nearly a fifth month-on-month due to the double whammy of demonetisation sucking up cash from the system and a demand slump after the festive season when most consumer purchases take place.
Amid an overall sales dip, ecommerce majors said that cashless transactions have at least doubled over October, raising their proportion compared to that of cash purchases during the month, as users switched to paying online, cards or through mobile wallets to fight off the cash crunch.
â€œAs per our preliminary estimates, sales of smartphones in November through e-commerce channels declined by 18% monthon-month,â€ said Pavel Naiya, analyst at Counterpoint Research. â€œThe share of smartphone sales online has also dropped to 34% in November, after having rising to 37% in October on the back of festive season purchases.â€
In the quarter ended September, about 31% of all smartphone sales were happening through online portals. While most of essential purchases in handset category last month was supported by EMI offers and schemes from online partners, analysts estimate smartphone sales through e-commerce channels in December to be remain flat or at best grow in single digits.
Overall, Indian handset market shipments fell 26% in November from October, while smartphone shipments fell 23%, in the aftermath of the demonetisation of high value notes, Counterpoint said in a note.
The resulting liquidity crunch led to consumers stalling or delaying purchases and inventory pile ups for phone makers.
E-commerce players â€” for whom cash on delivery is the primary mode of sales â€” initially stopped taking cash on delivery payments, but quickly introduced payments by cards or mobile wallets, in order to spur demand online. In the offline segment, buy-now-pay-later and zero interest cost schemes were announced by players like Samsung and LG.
â€œCashless transactions have risen by 100% in November, driven by product categories such as phones, consumer electronics and apparel,â€ a Flipkart spokesperson said. The company said the ratio of pre-paid to cash on delivery orders has changed from 20:80 to now 40:60, across product categories.