Apple India’s new country head Michel Coulomb is dismantling the sales strategy of predecessor Sanjay Kaul and reverting to an ‘organised distribution’ structure for iPhones, iPads and Mac computers. For consumers, this will mean Apple products will cease to be discounted as the number of distributors is pared and the company takes a hard line on maintaining prices.
The thinking behind the move is that the brand had been diluted by giving distributors a free hand to sell to any retailer, even at lower prices, three persons directly aware of the development said.
“The earlier ‘open distribution’ strategy at Apple India had created a lot of discontent amongst its offline trade partners, since the distributors would often indulge in wholesaling to achieve targets leading to rampant deep discounting online and fluctuation in prices almost every day,” said a senior executive at Apple’s leading trade partner. “So much so, Apple was even considered as a discounted brand. The new country head is pulling the plug after reviewing the scenario.”
Coulomb, who took charge in December, will retain only two national distributors–Ingram Micro and Redington.Brightstar, Rashi Peripherals and HCL Infosystems will be phased out, the executives said.
The aim is to resolve confusion over pursuing a volume growth strategy and keeping the brand’s premium status intact, with Coulomb coming down firmly on the side of the latter, they said. He is confident that two national distributors will be sufficient to ensure product reach.
Besides, as part of the new strategy, Apple will sell directly to large retailers and online partners, which will also mean better price control. This will be undertaken from the new distribution centre Apple has set up at Bhiwandi near Mumbai.
Previously, Apple India used to give a free hand to its distributors as they sought to meet sales targets.
Online accounted for 55% of iPhone sales, hitherto driven by discounting. “While there will still be special promotions online for Apple products, the days of deep price cuts seem to be over,” said one of the persons cited above.
The executives said Apple has informed the trade about the exit of HCL and Brightstar, while Rashi is also in the pipeline. The terminations will take effect early next year.
Brightstar and Rashi Peripherals did not respond to queries. HCL Infosystems informed stock exchanges.
Source: Economic Times