The partnership between Reliance Retail and Oppo/Realme, the fourth biggest smartphone brand in India, has been called off, confirmed Realme’s India CEO Madhav Sheth.
Realme had struck a deal with Reliance Retail in November 2018 to sell their smartphones through the latter’s 600 outlets in India. Furthermore, major retailers in South India such as Sangeetha, Poorvika and Big C have also gone the Reliance way, apparently over the low margins Realme sales fetch. Realme offers the lowest margins to the sellers at 4% as opposed to India’s biggest smart phone brand Xiaomi’s 5-6% and Samsung’s 5-11%.
“To offer real price of the product for our customers, we work on low margins and look forward to collaborate with such partners. We were in an exclusive partnership with Reliance Digital and Jio stores for offline sales last year. As we have expanded our footprints across the country, our collaboration with the Reliance group has been called off,” Sheth told The Economic Times in an exclusive interview.
Realme phones are sold through more than 3000 stores across 35 cities including Mumbai, Hyderabad, Surat, Ludhiana and Chandigarh. Sheth said the brand will set up 20,000 outlets in India by 2019.
“Despite operating on restricted margins we are working with chains like Global Access, TecQ and Cellbay. We are on the verge of collaborating with one of the biggest retail chain in South India soon,” Sheth said in the interview.
Reliance Retail works with top phone brands such as Xiaomi, One Plus, Motorola and Micromax’s subsidiary YU Televentures. Reliance is also said to be in talks with US contract manufacturer Flex for producing about 100 million mobile phone handsets at its factory in the special economic zone (SEZ) near Chennai. Ending the partnership with the largest retailer in the country doesn't augur well for Realme, especially at a time the Chinese smartphone brand is looking to enter the tier 3 markets in India. Realme is aware of the potential of India’s rural and suburban markets and is betting high on offline channels to drive sales.
“Realme India is expecting to get 30% of its revenue from offline and balance 70 % from online market. We will balance our investment on both online and offline platforms,” Sheth said.
With the new FDI rules in place, the lure of online market places have diminished and smart phone brands like Realme can’t afford to bet big on big players like Amazon and Flipkart to push volumes.