Apple India has kicked off a sales revamp that involves blacklisting retailers if they pick up stock from wholesalers that sell at a discount, reining in the rapid expansion into neighbourhood stores and ensuring sales at maximum retail price as in the US, four senior industry executives said.
That’s a throwback to the earlier practice in India when retailers only offered discounts as part of Apple-backed consumer promotions, they said.
This coincides with the exit of three senior sales executives from Apple’s India leadership team with more departures likely,especially by mid-level ones, which means a new team will now handle sales, said the people cited above.
Those quitting include Rahul Puri, who was head of national sales, distribution and operator business; Jayant Gupta who used to head iPhone sales, modern trade and Apple Premium Retail stores; and Manish Sharma, who was national sales head for telecom.
The iPhone maker has also created a new sales audit team under chief financial officer Gaurav Duggal to randomly pick up products from the market to ensure foolproof compliance of its sales processes.
Money previously allocated for the channel development fund is said to have flowed as a discount to distributors and retailers, said the people cited above.
Apple has put a stop to this with the audit team keeping a close watch.
Previous India country head Sanjay Kaul had been pushing sales through discounting and rapid expansion.
Apple headquarters in Cupertino felt that was not yielding results as its smartphone market share stayed stagnant at 2-3% in India for over five years. “Hence, the cleaning-up exercise was started,” said one of the persons cited above.
“Apple also felt the earlier strategy had diluted the brand’s ‘premiumness’ and led to a decline in average selling price when competition in the Rs 30,000-plus Indian smartphone market is at an all time high led by Samsung, One-Plus, Google, and now even by brands like Xiaomi and Oppo.”
The new strategy is being implemented by Kaul’s successor Michel Coulomb who took charge in December.
Incidentally, several of Apple’s trade partners — especially the franchisee-owned exclusive Apple Premium Resellers and large retail chains — were said to have been unhappy with Kaul’s strategy since the discounting was eroding product prices and favouring online stores.
Executives said Apple wants to sell at stores that can provide a complete sales experience and hence clamping down on smaller neighbourhood stores. Apple has also stopped selling Mac computers from such stores, an exercise it had started last year. An Apple India spokesperson declined to comment.
Last month, Apple decided to move away from five national distributors to two to tighten distribution as ETreported. Coulomb decided to retain Ingram Micro and Redington while phasing out Brightstar, Rashi Peripherals and HCL Infosystems by next March.
Apple has since linked retailers billing systems with a distributor to ensure they do not buy from unauthorised sources. Distributors cannot operate outside their territories and undertake any wholesaling whatsoever, the chief of a cell phone retail chain said.
“If a retailer does not maintain sales terms, they will not be eligible to offer affordability schemes like EMI (equated monthly instalment) and cashback to consumers and even supplies might be stopped,” he said.
The owner of an Apple Premium Reseller store said the company is bringing the focus back on large exclusive stores like his, Apple authorised multibrand stores and retail chains since these can offer the right sales experience. “Among neighbourhood multi-brand cellphone stores, Apple will sell only in limited ones. This also means it will become very selective in choosing partners for its India customised smaller exclusive Apple stores,” he said. Apple has plans to open 1,000 such smaller stores in India.