One step back and two steps forward seems to be Apple’s new strategy in India.
The American smartphone giant has decided to postpone the launch of its much-awaited online store in the country as it plans to wait for the right time to make the debut.
Instead of the scheduled launch during the first quarter of this year, the Cupertino-headquartered company plans to make its digital platform live in August-September expecting high demand due to the upcoming festive season in the world’s second-most populous country, local media Economic Times (ET) reported. Citing sources, the report said Apple wants “more time to complete the back-end work and to roll it around a high sales period to coincide with the launch of new iPhones before the festive season.”
According to the report, Apple CEO Tim Cook would be making his second visit to India around June-July to go through the company’s manufacturing and export plans as well as its retail strategy in the South Asian nation. While in India, he is expected to meet Prime Minister Narendra Modi and announce the roll-out of its online store later in the year.
The ET report said since the “back-end work like logistics and supply chain are still not sorted to meet global standards,” the launch has been pushed back to the period it is most beneficial to the company. Apple is working with logistics company DB Schenker, which operates its Mumbai distribution center—marked as the hub for the online store.
Reportedly, the earlier plan was to launch the online store in March 2020 with the launch of a new iPhone model—rumored to be iPhone 9 also known as iPhone SE2.
Krish Sankar, senior research analyst at American multinational independent investment bank and financial services company Cowen in a recent research note said Apple will produce at least six million units of iPhone SE 2 aka iPhone 9 between January 1 and March 31. Priced at around USD 475 (INR 33,819), it may be available by March and could contribute to 12% of iPhone production in the second quarter of the year.
This is in line with the Bloomberg report earlier this month which said Apple’s new low-cost iPhone would enter mass-production in February and could be unveiled as early as March.
Apple revealed its retail plan mid-last year when the company informed the Indian government in August 2019 that it would invest USD 139.5 million (INR 1,000 crore) to open a retail chain and a dedicated online store. Apple’s physical retail stores are expected to come up next year. The first Apple store would come up in Mumbai, followed by another one in Delhi-NCR, the report said.
While offline presence has become crucial for all the major handset players in India’s growing smartphone market, online has its own charm with its proven track record of making brands and models a superhit. Chinese device companies such as Xiaomi and One Plus have gained immense popularity in India thanks to online marketplaces Flipkart and Amazon.
Almost one-third of Apple’s sales are generated from online channels, as per the industry estimates. Mobile devices are the biggest category for e-commerce platforms, which make up almost 50% of their sales.
According to the data collated by research firm Counterpoint, Apple shipped 1.9 million units of iPhone to India in 2019, a marginal increase from 1.8 million units a year ago. Last year, the American giant turned around its business in the country by slashing device prices and starting assembling operations. In its latest report, Counterpoint said Apple was one of the fastest-growing brands in Q4 2019 driven by multiple price cuts on its XR device, as it focused on manufacturing the models locally in India.
“Additionally, 2019 saw the fastest roll-out of Apple’s new iPhones (11 series) in India, with aggressive pricing and a good channel strategy,” the report said. “In fact, the new series especially iPhone 11 was introduced at a lower price point than the last year’s iPhone XR launch. This has helped to gain share during the festive season and in its launch quarter in India.”
At present, Apple, being a premium brand, has a meager 2% market share in India, which, as per the Counterpoint report, surpassed the US “for the first time on an annual level” to become the second-largest smartphone market globally by reaching 158 million shipments in 2019.