Date
11 December 2017

How savvy consumers are scaring up smartphone online sales

It’s one of the industry’s worst-kept secrets — a growing number of Chinese gadget lovers shop online.

Yet, it has taken a while for smartphone makers to warm to the idea of e-channels to push their products out into this segment of the consumer market.

Among the latest adopters are Finnish manufacturer Nokia and fast-growing domestic brand Coolpad (02369.HK). Both have recently tapped JD.com Inc., a leading online shopping portal, to boost sales. 

JD.com is the exclusive online retailer of Nokia’s X Android smartphone. It is accepting pre-orders for the 599 yuan (US$97.57) device and offering free apps to the first 10,000 customers.

On the other hand, Coolpad has bagged a 10 billion yuan purchase order from JD.com including 16 million units in pre-orders for its Great God F1 model under a strategic cooperation agreement.

Coolpad has high expectations for the JD.com deal. Of the 30 billion yuan to 40 billion yuan revenue it expects this year, it estimates 12 billion yuan will come from online sales

Homegrown smartphone Xiaomi showed the power of online distribution with its meteoric rise during the past three years. Founded by Chinese entrepreneur Lei Jun, the eponymous company solely relies on e-channels. This year, it expects to sell more than 40 million smartphones.

Xiaomi’s success has not gone unnoticed by its rivals which are under increasing pressure to catch up with the online trend amid changing consumer behavior.

Coolpad, which relied on mobile operators to sell its phones bundled with a service contract, recognized this change in buying habits and started to sell standalone devices on its website. That led the company to JD.com, confirming perhaps what it has known all along.

With the Chinese government driving growth in 4G users, Coolpad has the potential to grab a significant chunk of the smartphone market, especially with its price advantage.

Nokia is trying to rekindle Chinese fondness for its products which had dominated the domestic market during the 2G era in the 2000s.

The company is ramping up online sales by targeting price-conscious younger users. Given the competitive prices of Nokia X and residual brand awareness, the device is expected to be a popular item on JD.com.

That is undoubtedly a good thing for JD.com Inc. as it pursues an initial public offering in the United States. With more smartphone brands shifting to online sales, JD.com could gain more market share.

Online channels accounted for 10 percent of all smartphone sales in China last year. With the rising penetration of mobile e-commerce, that proportion should rise further.

How long will it take before JD.com gives Alibaba’s Taobao and TMall a run for their money?

– Contact us at [email protected]

RA

EJ Insight writer

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