Low demand, increasing competition and pressure on margins are causing distress to mobile companies in India. In a recent move, to remain sustainable in the market, mobile companies are firing in-shop promoters (salesmen) in multi-brand shops or cutting salaries of many others.
Brands such as Lava, Intex, Micromax, Karbonn, Oppo, and Vivo have vastly reduced the number of in-shop promoters over the past couple of months, according to Economic Times.
The report added that the number of in-shop salesmen has been reduced to one-third. In one shop, the number of promoters has come down to five from 14.
Besides, to further cut down the expenses, the mobile handset makers have also resorted to a salary cut of these promoters. They have reduced the salaries of the promoters from Rs 18,000 a month to Rs 14,000.
Experts said that the immense competition from Xiaomi and Samsung have caused the other handset makers to take desperate measures to remain economically sustainable in the price conscious market.
In November last year, with 24 per cent market share Xiaomi became the largest selling and the fastest growing brand in India, according to the International Data Corporation (IDC). It witnessed its sales quadrupled in September quarter in India.
Interestingly, there was a tie between Samsung and Xiaomi. Samsung, which is another largest phone seller in India, also controlled 24 percent of the market in the country and registered quarter-on-quarter growth of 39 percent.
However, some industry players put the direct blame on e-commerce players for their misery.
Hari Om Rai, chairman, Lava International, claimed the direct and indirect discounting by e-commerce players for leading to the closure of several retail shops, which has affected jobs. The company has let go some 4,000 out of 11,000 employees for underperformance.
“Some of the online players are circumventing FDI rules by holding inventories and influencing the prices of electronic goods directly and indirectly, through various sub-companies,” Rai alleged.