The advent of 5G has made it difficult for stores to sell 4G phones.

2 minutes, 3 seconds Read

As the market share of 5G smartphones approaches 50%, distribution and retail sectors face difficulty offloading their remaining 4G handset stocks. Currently, over nine weeks’ worth of inventory is sitting idle in retail channels, according to industry analysts.

In an attempt to liquidate these stocks prior to the important festive season commencing in August, smartphone brands have begun implementing permanent price cuts on 4G models nearing their lifecycle end.

Prachir Singh, Senior Research Analyst at Counterpoint Research, said, “The 4G inventory stock is presently exceeding the average market inventory, which hovers around 9-10 weeks at this moment.”

Simultaneously, the demand for 5G smartphones is seeing a steady increase, achieving a 50% market share in April, facilitated by declining average selling prices (ASP).

With 5G smartphones now entering the under ₹15,000 segment, the existing 4G models on the market are attracting fewer customers. Manish Khatri, a partner at Mahesh Telecom, commented, “We’re facing challenges selling older models with limited RAM and storage. Some retailers have ceased stocking 4G smartphones entirely.”

A retailer based in New Delhi told ET, “Since April, we’ve reduced the intake of 4G smartphones from distributors due to a sharp decline in demand. We’re only stocking those 4G models that have seen price reductions, and even then, only in limited quantities.”

Offline retailers shared that 4G smartphones now account for about 45% of sales, a steep drop from 80% last year, as brands limit the launch of new 4G models, especially those priced above ₹10,000. They observed that customers are increasingly demanding 5G smartphones, which helps them meet their monthly sales targets more comfortably and earn larger margins.

Ajay Sharma, an advisor to research firm TechArc, suggested that the most effective way to deplete the stocks of 4G smartphones is through price cuts and promotional offers to attract customers. Unlike the case with 3G handsets when 4G smartphones flooded the market in 2015, he noted that there will still be demand for 4G smartphones due to the current limited consumer use cases of 5G networks.

In line with this, brands such as Xiaomi are allegedly “providing around ₹20 crore support to retailers to assist in the sale of their unsold end-of-life models,” according to a representative from the All India Mobile Retailers Association.

Sharma added, “If you consider recent launches, hardly any brands are introducing new 4G smartphones. Only those brands who had made large orders in their supply chain are compelled to launch 4G smartphones to clear out the inventory of components before they become obsolete.”

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *