To celebrate the tenth anniversary of their renowned smartphone lineup, Apple released the all-screen bezel-less iPhone X. The flagship device made its way to India not much later than its official launch for an unusually high price tag of ₹89,000 in comparison to the announced $1,000 (~₹64,500) price tag. The number of devices that were sold in the country may be good for Apple but not for retailers themselves.
A couple days ago, several reports of Apple undercutting the retail margins on the sale of iPhone X in India had come to light. It was published that the Cupertino giant had hugely reduced retail margins for sellers in the country by around 30%. Apparently, the profit margins on iPhone X have been reduced from 6.5% to 4.5% for large, as well as small-scale retailers.
Apparently, the profit margins on iPhone X have been reduced from 6.5% to 4.5% for large, as well as small-scale retailers.
The report further mentions that the margins reduced down to around 2% when buyers paid by card, which is quite common due to the hefty price. This has angered large chain owners and other retailers, who claim that Apple makes huge margins on the device but doesn’t want to share the benefits with sellers.
The report further mentions that the margins reduced down to around 2% when buyers paid by card, which is quite common due to the hefty price.
Talking about the situation with Economic Times, Subhash Chandra, MD at Sangeetha Mobiles, one of the largest retailers owning around 400 stores across the country, said:
Apple gives the least margins… How on earth do they expect the retailer to work for them for free — our overheads are anywhere around 10 percent.
The retailers have also argued that iPhone X costs only $370 (~₹24,000) to manufacture but the Cupertino giant has Indian users paying close to 4 times that price for this device. Still, the demand for the costliest iPhone is present and Indians are ready to pay the huge price but retailers are looking to halt their iPhone orders due to lower margin than expected. Some of them have already stopped stocking the device for the said reason.
Further, the competition from online sellers who are offering better discounts and cashback deals already takes a toll on offline stores. The margin cut has only damaged their fledging business. Even if you ignore the overhead charges, there would surely be some leeway left for Apple to offer a better deal to Indian retailers. Apple’s competitors in the Indian market such as Samsung offer better profit margins, about 12-15%, pushing retailers to sell their devices without any worries.
Apple, who’s now increasing its focus on India, is leaving behind its retailers by cutting the margins it previously offered them. Analysts believe the Cupertino giant is playing it wrong and should place India much higher on their priority list, as the country is one of the fastest growing economies with the second-largest Internet userbase in the world. If Apple fails to capitalise on their expansion opportunity in India, it may falter behind its arch-enemies. Do you think the same Apple’s decisions? Let us know in the comments down below.