Oppo, Vivo Scale Down Distributors, Retailers, Aim Returns To Grow

In a strategical turnaround for cost and generating returns, Chinese smartphone companies Oppo and Vivo are scaling down the distributors and retailers selling their phones. The company’s pullback may get compensated with the wish to expand their presence even in the smallest towns and cities.

Navkendar Singh, research director at International Data Corporation India said, “The companies have reduced channel margins and retail spends and now they’re going for more depth than width of distribution. They have also rationalised distribution and are choosing to be available on fewer counters than earlier where they have strong visibility and sales.”

Industry experts said in New Delhi alone, the number of stores selling both brands has come down by almost a fifth to about 8,000. Vivo confirmed the change in strategy.

A spokesperson for Vivo said, “Regarding Vivo’s trade channel strategy, we have redeployed our distribution strategy with a focus on providing varied choices and experience for consumers,” adding that the company will focus more on online sales following the launch of its own e-store in India.

An Oppo India spokesperson said it’s business as usual. “We would like to reiterate that our business operations are normal at present stage.”

A leading retailer in the capital, who did not want to be identified, said the two companies would earlier pay shop owners hefty amounts to put glow-signs even if they sold one or two units a month and now they’re asking retailers not to offer discounts and they have increased targets.

Oppo has moved out of the top five rankings in the smartphone segment with a 4% share in January from 9% a year ago, while Vivo’s market share halved to 7% in the same time.

Industry experts and analysts said the companies will benefit from the strategy change in the medium to long term.