Smartphone makers Oppo and Vivo have cut down retail margins by over 40% in India. Both Chinese smartphone companies cut the margin offered to large chains to 14-15% from 23-25%, the executives said. They reduced it to 5-6% for standalone stores from 15-16%.
As per the report published in economic times, both Oppo and Vivo have lost about 10,000 sales outlets each. Both had about 70,000 outlets each in the country before the margin cuts and the number of stores selling their phones may fall further, they said.
Founded by Chinese billionaire Duan Yongping, Oppo and Vivo together have a 17% share of the market in India. As per the sources, the reason for this cut down is to make the companies profitable. One of the retail chain in Tamil Nadu, Sangeetha Mobiles has stopped selling Oppo and Vivo due to margin issues.
A Vivo India spokesperson said its retail network has not shrunk and the company plans to add outlets this year.
“Last year, we witnessed good response from the market which contributed towards an increase in revenue and market share. As per Counterpoint Research, Vivo V7+ commanded 40% share in the Rs 20,000-25,000 segment in November 2017. We plan to further build on the growth momentum this year,” he said.
Both the companies cut the marketing expenses in India over the past three months in outdoor, television and print advertising. Vivo had a 9% share of India’s smartphone market in the third quarter of 2017 compared with 5% a year earlier.
Oppo currently manufactures phones in India through third-party vendors and is setting up its own unit in Greater Noida near New Delhi. Vivo has an assembling unit in Greater Noida with a capacity of 1-million smartphones per month, according to its website.
Vivo India posted a loss of Rs 111.66 crore in 2016-17, according to regulatory filings, while sales grew six-fold to Rs 6,173 crore. Oppo’s earnings figure was not available, although its sales surged seven-fold to Rs 7,974 crore.