The average monthly sales of tablets in India have trebled since Q4, 2011. This is primarily due to the increasing number of low-end (sub $200) device models being launched by Indian OEMs, enabled by both hardware commoditization (driven by China/Taiwan based suppliers & ODMs) and OS availability (most of these devices run on Google’s Android OS).

Source: Convergence Catalyst Estimates 

Tablet, as a product segment/device is still relatively new to Indian consumers and the retail channel. And as it is considered an unfamiliar device, a large section of the retail channel is not adequately equipped or confident in selling this product, and hence the channel margins are significantly high.

While Large Format Retail (LFR) continues to be the leading channel for tablets sales in India, in the last two quarters, E-Commerce sites (or Online Retail Stores) have begun to emerge as strong sales and marketing channels for these devices. As per our estimates, E-Commerce sites contribute about 8% to 10% of total monthly tablets sales in India currently. Majority of the tablets sold through E-Commerce sites are the low-end (sub $200) devices and it is the urban consumers who are adopting these devices, primarily for mobility and the web-browsing experience. According to our research, there were close to 210 models of tablets of 70 brands listed with the top 5 E-Commerce sites (in terms of tablets sales) at the beginning of September 2012.

E-Commerce sites in India can be broadly classified into three categories:

  1. Deal Sites – Sites that offer deals & discounts on various products and services (such as Snapdeal)
  2. Open Market Stores – Sites that only catalogue the products, sellers and brands (such as Junglee & Ebay)
  3. Etailers – Sites that buy and sell products (such as Flipkart)

While some Etailers have their own warehouses and also invest in products purchase (basis the initial demand), the ‘Deal Sites’ purchase the devices upon the orders placed by the consumers. Open Market stores offer great product and brand visibility to the tablet OEMs. Along with ‘ease of setup’ and ‘logistics support’, the key advantage these E-Commerce sites offer the tablet device OEMs is ‘the access to the target consumer segment’ and help promote their products through e-mailers & SMSs.

Currently, it is a win-win-win situation… 

Currently, there are multiple advantages for all the players (E-Commerce sites, device OEMs and urban consumers) involved:

  • For the E-Commerce site vendors, the sale of tablets (with average ASP of $150) while contributing to both the topline revenue and increasing the average ASP of products sold, also brings high-quality customers to who they can potentially upsell/cross-sell other products & services
  • For the tablet device OEMs, E-Commerce sites offer existing sales and marketing channels already catering to the target consumer segment (through other products & services), reduced marketing budgets and channel margin (as compared to the retail distribution channel) and access to various analytics (such as ‘prior device purchase history of the consumer’, ‘average ASP of the consumer’, ‘consumer spending pattern’, etc)
  • For the end consumers wishing to purchase tablets, E-Commerce sites offer access to multiple models and brands along with deals & discounts at the click of a button, reviews by prior buyers, and other logistical advantages such as home delivery, cash-on-delivery & in some cases, 30-day return guarantees

However, going forward, scale is going to be an issue 

Going forward, as tablets proliferate beyond the early adopters and are adopted by the mass-market consumers in India (primarily adopted for multimedia consumption and basic web browsing), the availability of these devices in retail stores will become imperative and OEMs will have to invest in conventional distribution and marketing channels. Although E-Commerce sites will continue to be relevant for tablets sales & marketing, their contribution (as a percentage share of sales) is expected to decrease.


Note 1: We expect the tablets sales to normalize post Q3, 2012 as the device sales into educational institutes would not be as high as the beginning of the academic year


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