"With operators reducing their smartphone subsidies, there is greater opportunity in the open market for vendors, and e-tailers are a key channel that vendors are focusing on,” said Tay Xiaohan, Senior Market Analyst with IDC Asia/Pacific's Client Devices team. "E-tailers in China often offer discounts or free gifts to consumers, and also tend to sell phones at a lower price as compared to the offline retail shops. They have also started offering more services in the recent years."
IDC expects the share of e-tailers to grow over the next few years. Other reasons include:
Major promotions. JD, Tmall and Suning Yigou have huge promotions at least three times a year. This includes the promotions on 18 June and 18 August to celebrate the anniversary of JD and Suning Yigou respectively. Rival e-tailers often match a competitor's promotion. Another major online festival to boost sales is the annual Singles Day promotion, held 11 November.
Discounts and services. E-tailers such as JD offer consumers the option of paying for a phone through monthly instalments, or to trade in their old phones to obtain a discount. They also add service options like insurance for damage to mobile phone screens. JD will repair the phone for free for insurance holders, or provide monetary compensation in the event that the screen is damaged.
Variety. A wider range of models are offered, and some phone models can now be found only through e-tailers. In contrast, consumers are limited to phones of a specific brand at vendor-branded retail shops. Typically, physical shops which carry multiple brands cannot command the same economies of scale to offer the same variety of models that an e-tailer can.
Convenience. From same-day delivery of purchased phones to easy price comparison of phone models and access to user reviews and feedback, e-tailers offer more options to consumers.
With most major vendors maintaining agreements with e-tailers, IDC expects that e-tailing will continue to be a popular channel in China in the coming years. Even vendors like Xiaomi, which has a large emphasis on retailing via its own website, recently signed a deal to open an online store on JD's website in May 2015. Huawei, which sold the most number of phones through e-tailers in Q215, has online stores with the three major e-tailers in China.
With most major vendors maintaining agreements with e-tailers, IDC expects that e-tailing will continue to be a popular channel in China in the coming years. Even vendors like Xiaomi, which has a large emphasis on retailing via its own website, recently signed a deal to open an online store on JD's website in May 2015. Huawei, which sold the most number of phones through e-tailers in Q215, has online stores with the three major e-tailers in China.
