Apple might be planning to crack down on e-commerce websites selling iPhones at discounted rates in India soon. This has apparently come about because of the company’s new India head Michel Coulomb.
Coulomb is taking over from Sanjay Kaul in the middle of a slowdown in sales. He apparently wants to introduce discipline into Apple’s India operation. Step one in that plan is to halve the distributor margins to 1.7% – 2.5% and give distributors specific areas of concentration.
For example, Ingram Micro will be in charge of sales to modern retail and franchise stores, while HCL will focus on B2B sales. Prior to these changes, distributors were free to sell to any trade partner. This meant that stock could then be sold at a reduced rate online by giving up some of the margins.
3 senior industry executives claim that Apple has in turn increased sales margins for Apple-exclusive franchise-run stores from 4% – 5% to 5% – 7%. This is supposedly being done in order to build the offline channel and prepare the market for wholly-owned company outlets which may finally become a reality in 2020 or 2021.
All this is being implemented to increase sales from Apple brand shops in India and put an end to indiscriminate online discounting which distorts its brand image. This might turn out to be a bad move though, as more than half of all iPhones are sold on the internet.
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Sites like Amazon and Flipkart frequently offer huge cuts on iPhones. Without this incentive, it’s not clear whether anyone will pay full price for such expensive handsets. While Apple’s not planning to directly control cost, it’s hoping that this new order will bring about channel hygiene after existing stock gets sold out.