China’s Realme will thrash out a gameplan for clearing its sizeable unsold smartphones inventory -- currently with online retailers Amazon and Walmart-owned Flipkart -- after the government clears the air on whether the February 1 deadline for implementation of new foreign direct investment (FDI) rules for ecommerce will get extended.
Last month, the government tightened the FDI rules in the ecommerce space that bar online marketplaces from inking exclusive deals for products on their platforms. The tweaked rules also allow a vendor to sell a maximum 25% of its inventory on the ecommerce platform, a scenario that could take away the advantage of online-focussed handset brands such as Realme, Xiaomi, Lenovo, Asus or Huawei.
“We’ll take a call on dealing with our sizeable smartphones inventory after the government provides clarity on whether the February 1 deadline for the new ecommerce FDI rules get extended,” Madhav Sheth, CEO, Realme Mobile Telecommunications (India), told ET. The top Realme executive expects such clarity to emerge in a week’s time and is hopeful the deadline may get extended till April 1.
Once clarity on the implementation timeline emerges, Sheth said, Realme would take calls on “whether to stock its entire smartphones inventory with its existing online retailer partners or also build its own warehouses in India”.
The Realme Mobile CEO said the company, in parallel, is also “exploring opportunities to work with other ecommerce players such as Snapdeal and Paytm to ensure its smartphones are available across multiple websites and on all online customer touchpoints”. Such a strategy to widen its online marketplace presence, he said, would also help the company overcome any potential business limitations triggered by the new FDI rules in ecommerce, if implemented in their current form.
Another leading Chinese smartphone maker, OnePlus, has no unsold inventory related issues, but has also sought clarity on the new FDI norms for ecommerce. “The new regulation isn’t clear. We are committed to the online channel, which will be our business model, and we intend to be exclusive to Amazon,” Vikas Agarwal, general manager OnePlus told ET.
OnePlus, he said, has plans to expand into offline channels, but that “isn’t going to be a major sales channel”.
Realme, on its part, which started out as an online exclusive sub-brand of Oppo, now operates as an independent brand and corporate entity in India and has big plans to widen its offline presence.
In the immediate term, Sheth said Realme will radically step up its offline presence across India, by setting up a whopping 20,000-odd offline retail outlets across 150-200 cities by December 2019. These outlets will be a combination of large format retail (LFR) and Category A & B mom & pop stores, he said.
“The immediate objective is ensure an estimated 30% of India revenues come from the offline channels by December 2019”. At present, 100% of Realme’s India revenues emanate from online sales.