Will the Smartphone Market in India Bounce Back After Lockdown? Realme India CEO Madhav Sheth Weighs In

Delayed launches and complicated logistics will pose challenges for all manufacturers

By Jamshed Avari | Updated: 11 May 2020 12:13 IST

Will the Smartphone Market in India Bounce Back After Lockdown? Realme India CEO Madhav Sheth Weighs In

Photo Credit: Realme

Realme Vice President and Realme India CEO, Madhav Sheth

Highlights

The budget Narzo series was supposed to be launched over a month ago
Smartphone sales have been allowed to resume in some parts of the country
While Q2 2020 will be impacted, Sheth says things will improve later

With lockdown conditions across much of India now somewhat eased, some parts of our lives can begin to get back on track. Commerce, both online and offline, has taken a huge hit, and so has the Indian manufacturing industry. With mobile phones falling outside the definition of essential products, everything from manufacturing to sales and distribution has been at a standstill for over a month now – a massive disruption considering that we had become used to seeing multiple new launches each week – but now production and distribution are beginning to get back on track. Before COVID-19 hit, companies were launching new models each week, afraid that the slightest sign of stagnation might give a competitor some advantage.

This has been a bad couple of months for nearly all kinds of businesses, and an Q2 is expected to show an unprecedented hit to the booming smartphone industry. However, companies and analysts are currently predicting that the second half of this year will be better in terms of sales figures. We're already beginning to see things going back to normal, with manufacturing units resuming work and sales being held for the first time in over a month – at least for orange and green zones. Still, several questions remain.

When smartphones do go on sale again, will they hold the same appeal as before? Will buyers hit by recession think twice about discretionary spending? Will more consumers choose e-commerce or offline retail, as concerns about social distancing remain? And how are manufacturers planning to cope with the disruption to their current and future plans?

Realme has been particularly affected – while other companies have had to delay launches or keep plans on hold, Realme announced its new Narzo series of low-cost phones just before the lockdown was imposed, but has not been able to hold its planned online sales yet. Ahead of the Realme Narzo launch (which is finally taking place on Monday) we asked the company about how this might affect consumers' interest and demand, and Madhav Sheth, Realme Vice President and Realme India CEO, provided Gadgets 360 with some insights.

The most interesting thing about Sheth's perspective is his optimism."Smartphones have now become a necessity, so the overall number of smartphone sales in India in 2020 should not be influenced much", he told us. "The lockdown at most will delay consumers' purchasing but won't stop it."

He also added: "Moreover, smartphones have helped the masses stay connected to their friends, family, and work during this pandemic. We are optimistic that the demand will only be impacted initially, but will soon go back to normal, in less than a quarter. We can also expect that purchasing behaviors would be shifted from higher, premium price segments to more budget-friendly segments."

Sheth had some specific insights about the budget segment, where Realme focuses most of its energy. As he told us, "Practically speaking, it all depends on how much the economy of India can recover back to the days before COVID-19. If people's income shrinks, and [accounting for the] GST hike that came into effect on April 1, the overall shrink of smartphone volumes will be in direct proportion to the recession of the economy. From a consumer behaviour point of view, more purchasing will happen of budget phones in 2020 against 2019. The mid-range to flagship segment will be impacted the most as people will have less money to face higher prices."

We then asked how the current situation affects Realme's launch calendar for the rest of the year – will all future products be pushed back, or is the delayed launch of current products an incentive to refresh them sooner? "Well, some delays have happened to our product launches, like the Narzo series" he said. "Our priority will be continuing the delayed Narzo launch and bringing our current models back to sales, including the Realme 6 series. We do have more plans after [the Narzo series] and we are not cancelling any products as of now, only pushing back the launch plans in the same order. The Realme TV is lined up, along with several AIoT products, and we will be launching them soon. All the major work and plans related to these launches had already been done much in advance, and we had plans in place to make these devices available to our customers.

We were curious about how Realme will handle the logistics for its online sales, and what obstacles customers might still face. Sheth had some words of reassurance. "First of all, the scenario that customers will wait for several weeks to get deliveries, won't happen", he told us. "We will not rush to launch any products if the logistics and courier services are not back on track. We are launching new products only after we have taken a full evaluation of production, stock preparation, and logistics to ensure a smooth customer experience. However, we can still assume [that there will be] some logistics delays, of around three to five days, in the first two weeks after the logistics restriction is lifted."

He also added "Considering the volume of business we have been doing with Flipkart and other logistics partners, we will get the best resources support from them once the lockdown is over. We are expecting courier services to go back to normal after [lockdown is lifted] if the government allows, so that products from our warehouses and our partners can easily be shipped out to customers as before. We have also prepared sufficient stocks of the new Narzo series along with existing products like the Realme 6 series. Even if there is any surge in demand, we believe our own logistics system and our partners can satisfy customer demands easily."

Finally, we asked about the ground realities of phone manufacturing in India and offline retail. Will adequate stocks of new and existing smartphones be able to reach offline stores once they are allowed to open?

"We have prepared the first batch of stocks of the Realme Narzo series and the existing models, however, COVID-19 and lockdown have brought everything to a pause, especially the business of offline partners." he said. "In terms of production, we can only expect limited business operations would resume after lockdown lifts, and it will also take two to four weeks to revamp our production capabilities. We can only hope that offline business will continue with limited presence and enough safety measures. Considering all these factors, before we have a clearer overall picture, we would be taking a conservative approach to preparing stocks for our offline sales."

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