Apple, Amazon strike deal to boost sales in India, other key markets

Apple will begin selling its iPhone, iPad and Apple Watch directly on Amazon’s websites in India and other international markets as part of a global deal struck by the two technology titans.

Amazon will delist the Apple and Beats products being sold by non-authorised resellers, paving the way for the Cupertino-based technology company to exert more control over the online sales channel for its devices.

“We’re working with Amazon to improve the experience for Apple customers on their site and we look forward to those customers having another great way to buy iPhone, iPad, Apple Watch, Mac and more,” Apple said in a statement. In other international markets, Amazon might directly carry Apple products on its websites. However, in India, with law forbidding online marketplaces from carrying their own inventory, only Apple-authorised resellers will be allowed to sell iPads, iPhones and other products on Amazon.

Apple-authorised resellers in India include the likes of Reliance Digital, Chroma and Sangeetha, which are largely offline sellers and see themselves as rivals of Amazon. The only authorised online reseller that Apple has had so far in India is Infibeam. Industry watchers, however, said Amazon could easily circumvent the rule by making Cloudtail, an entity in which it owns 49 per cent, a certified reseller of Apple products. 

Amazon India did not respond to queries sent by Business Standard.

Neil Shah, research director at Counterpoint Research, said the partnership could help Apple take on Chinese smartphone maker OnePlus, which has become one of the leading player in the premium smartphone market thanks to Amazon.

Moreover, for Amazon India, the deal with Apple could give it something to counter the partnership Flipkart has with Google to sell its Pixel devices. Shah added that nearly one-third of Apple’s sales in India come from the online channel, with Flipkart selling more iPhones than Amazon until now.

“With Amazon having to remove third-party sellers of the iPhone, prices of these devices could become more coherent both online and offline. This could put some pressure on Amazon, which is trying to grab market share from rivals by offering lower prices to customers,” said Shah.

Apple, however, in the past has said it will not control pricing of its devices. The issue had cropped up when offline retailers complained to Apple that online retailers were severely undercutting the prices of iPhones and other devices, leading to a massive drop in sales for them.

A quick search among Apple’s authorised resellers shows that Reliance Digital is selling the latest iPhone Xs for Rs 96,900, a discount of Rs 3,000. Imagine, another authorised reseller, has listed the device at its sticker price of Rs 99,900, the same price that the device is being sold on Amazon currently. The deal, which will kick in after the holiday season, in January, will give Apple more visibility among online buyers in India. This could serve as a much-needed boost for the iPhone in India, whose sales have halved in the quarter ended September, according to the data from Counterpoint.

“Our business in India in Q4 was flat. Obviously, we would have liked to see huge growth,” Cook said in a call with analysts last week (Apple follows an Oct-Sep fiscal year). Analysts estimate that improved iPad and Mac sales in India helped the company post flat sales growth, even though the iPhone sales have been shrinking. However, they said it was imperative for Apple to remedy the issue, as India is expected to become one of the largest markets for premium smartphones in three-five years.

Tech rivals team up

• 71% of Apple’s sales in 2018, ended in September, were through indirect distribution channels like Amazon 

• In India, one-third of iPhone sales come from online channels

• As of Jan 4, Amazon will rid its site of Apple products from third-party merchants not authorised by the Cupertino-based firm

• With the latest deal, iPhone buyers will get the brand’s assurance when buying on Amazon 

Source: Agencies