Inventory buildup may hurt festive season sales for smartphone makers

Smartphone companies might find it difficult to boost their sales during the upcoming festival season as many of them are still burdened with large inventories from the first half of the year, The Economic Times reported.

 

Sluggish demand and slow retailer uptake in the first half of 2025 resulted in unused inventory, the report added, citing analysts and industry executives.

 

Smartphone makers are increasingly reducing product life cycles to ensure their portfolios remain updated ahead of the festive season. They are also rolling out discounts and offers on the older models and launching newer ones ahead of schedule to gauge market response, the report added. 

   

Citing a source, the report said, "A significant amount of inventory has built up over the first half of 2025, which brands are struggling to clear", adding, "Retailers are also cautious about stocking more units since they are already carrying a lot of inventory from last year.”

 

Xiaomi, Realme affected by inventory buildup

 

Among the brands most affected by the inventory buildup are Xiaomi and Realme, which have led to the brands offering additional margins and incentives to retailers to sell the end-of-life products.

 

According to a source quoted by The Economic Times, "Xiaomi now needs to offer more margins to retailers to get their support in clearing out inventories. But they are also facing a challenge in roping in more in-store promoters as there is a stiff competition from rivals such as Vivo and Samsung in hiring competent sales agents."

 

However, Xiaomi's India Chief Business Officer Sandeep Singh Arora expressed confidence in the company meeting its plans. He said, "We are entering the festive season with confidence and are well-positioned to meet our Diwali plans; delivering a successful season for all our partners and consumers."

 

To widen its retail reach, Realme is strengthening its distribution network by adding more partners in states such as Maharashtra, Rajasthan, and Uttar Pradesh.

 

Realme is now diverting some of its online-exclusive products to the offline channels to make room for fresh stock ahead of the festive season, the report said. 

 

Transsion paves the way to clear inventory buildup

 

Struggling with the inventory buildup, longtail brand Transsion has switched to a six-month product lifecycle for some of its top-selling products. The company is planning to launch "the slimmest Android smartphone ever seen" in the market ahead of the festive season to boost sales.

 

Arijeet Talapatra, CEO of Tecno India, said that the company is leaving no stone unturned to cater to the diverse Indian consumer and has launched a comprehensive portfolio to cover every critical price point and feature demand.

 

Transsion operates Tecno among other smartphone brands.

 

Flat festive period?

 

Citing data from the market research firm IDC, a flat festive period for the smartphone industry is expected in terms of volumes.

 

IDC India's senior research manager, Upasana Joshi, told The Economic Times that many launches, which were originally planned for Q3, were moved to Q2 to serve as a testing ground for brands to gauge reception, adding that brands like Xiaomi are dealing with financial constraints, which are thereby limiting their ability to invest in marketing channels.