Discounts, promos help smartphone cos cut inventory ahead of festivals

economictimes.indiatimes.com:

Smartphone brands are entering the festive season with six to eight weeks of inventory — which puts them in a much better situation than a year ago when there was a pile-up — and market trackers expect strong shipment growth this quarter, fuelled by affordable 5G smartphones. The inventory has come down significantly from the 12-13 weeks' pile-up by the end of the March quarter as a result of aggressive promotions, end-of-life discounting, and roping in of brand ambassadors, market trackers said.

«When the year started and the market was really low, inventory went up till 13 weeks, which came down to eight weeks in the second quarter, which is higher than the normal, but much better,» said Tarun Pathak, research director at Counterpoint Research. «Largely, brands go into the festive season with 8-9 weeks of inventory,» he said.

Last, year, however, brands were facing a situation of inventory pile-up going into the festive season as they did not foresee the sharp shipment decline in the second quarter. This prevented them from launching many new models before the festive season, Pathak said.

Worst hit were brands that rely primarily on online channels for their sales. Xiaomi and Realme, for example, saw their shipments decline 44% and 52%, respectively, year on year in the first quarter of 2023 on account of the heavy inventory that had carried over from last year, Counterpoint said.

By the second quarter, these brands were emphasising offline expansion to clear out the inventory, slashing prices on end-of-life products, and getting brand ambassadors on board to liquidate their inventory. «The ideal inventory is around 3-4 weeks, but now it is slightly higher because this is the time for the channels to buy from the