E-commerce shops drive more smartphone sales in China

Local e-tailers such as JD.com and Alibaba's Tmall account for 21 percent of overall smartphone sales, and their share will continue growing with differentiated services offered on these online platforms.

E-commerce operators are driving more smartphone purchases in China, accounting for 21 percent of overall sales in the second quarter of 2015, up from 14 percent in the same quarter last year.

The country's e-tailers, which include JD.com, Suning Yigou, and Alibaba's Tmall, are helping smartphone makers reach more consumers, according to market researcher IDC, citing its quarterly mobile phone tracker. In unit growth, the number of smartphones sold through e-tailers climbed 58 percent year-on-year in the second quarter.

IDC's Asia-Pacific senior market analyst for client devices, Tay Xiaohan, said: "With operators reducing their smartphone subsidy, there is greater opportunity in the open market for vendors and e-tailers are a key channel that vendors are focusing on.

"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 said e-commerce operators were expected to increase their share of the country's overall smartphone sales, fueled by several key factors such as regular promotions including the annual mega online shopping festival, Singles Day.

Also, some phone models would only be made available online through the e-tailers, which further offer a wider range of handset models compared to vendor-branded physical stores. IDC added that some e-commerce operators provided additional services such as insurance for mobile screens as well as alternative payment options, allowing consumers to trade in their old phones or pay for their phone through monthly instalments. JD.com also would repair phones for free or offer monetary compensation should consumers damage their screen.

IDC noted that handset makers increasingly were turning to e-commerce websites to boost sales, including vendors such as Xiaomi that focused primarily on selling via their own website. The Chinese smartphone manufacturer in May 2015 inked a deal to launch an online store on JD.com.

Huawei, which had an online store on three major e-tailers in China, sold the most handsets through this channel in the second quarter, IDC said, adding that the web retailer platform would continue to be popular in the next few years.

It noted, though, that rural China would prove challenging. The research firm explained that while Alibaba and JD.com had made efforts this year to expand their coverage in rural areas across the country, it would take a while before consumers in these markets adapt to buying handsets online.

"The share of e-tailers will continue to grow on a year-on-year basis, but it will not be at a fast rate, as growth will continue to come mainly from Tier 1 and 2 cities," Tay said, noting that e-tailers' increasing share would likely result in smaller retail shops in these cities closing down over the next few years.



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