Impacted by demonetisation, smartphone sales in the leading 50 cities fell by a whopping 30.5 per cent month-on-month in November, compared to October.

This downward trend can be attributed to the cash crunch, along with the cyclically lean period after the festival season in October, according to an International Data Corporation’s (IDC) smartphone tracker.

“Demonetisation has impacted the market at almost all levels, including customer demand and stock movement in the distribution channels. The slowdown was seen across all city tiers, with a de-growth of 31.7 per cent in Tier-1 cities and 29.5 per cent in Tier-2,3 and 4 cities in November over October. There was a huge drop in inquiries and a significantly reduced footfall at retail stores,” said Upasana Joshi, Senior Market Analyst at IDC India.

“Interestingly, the premium smartphone segment saw some growth during the weeks following demonetisation, wherein consumers were seen rushing to buy higher priced smartphones using the demonetised currency,” added Joshi.

India-based vendors were hit the most due, with a drop of 37.2 per cent in November across the top 50 cities, as compared to China-based vendors, with 26.5 per cent drop, and global vendors with 30.5 per cent drop over the previous month.

“In the offline channel, while Indian vendors were struggling, Chinese vendors like Oppo and Vivo pulled in strong demand largely due to their stronghold on distribution and better partner incentive schemes,” said Varun Singh, Market Analyst, IDC India.

Chinese Vendors

Market share of China-based vendors has increased to 42.6 per cent in in Tier-I cities, from 38.7 per cent in October.

Also, they extended their market presence in Tier-II and beyond, with a marginal increase in the market share. In addition to seasonal decline and impact of demonetisation, the market share of China-based vendors’ improved sequentially, owing of their high decibel marketing, increased credit line to distributors, and efficient channel management.

Market share of India-based vendors continues to decline across the tiers in November. India-based vendors are finding it difficult to compete with the aggressive China-based vendors due to shrinking spends in their marketing and the absence of good product assortment.