India's smartphone sector reported explosive growth in the second quarter – in glaring contrast to China – after handset vendors partnered with e-commerce players to ramp up sales in the world's third largest phone market.
Smartphone shipments to India totaled 26.5 million units in the April-June period – up 44 percent from the same period last year, according to International Data Corporation (IDC). Shipments to the world's biggest smartphone market, China, by contrast, rose by just 1 percent on year to 105 million units.
"E-tailers such as Flipkart, Snapdeal and Amazon are tying up with smartphone vendors and aggressively promoting sales through online channels," explained Kiranjeet Kaur, research manager with IDC's Asia-Pacific mobile phone team.
Collaboration between e-commerce firms and smartphone manufactures has been picking up since Motorola and India's largest e-commerce player Flipkart formed an exclusive partnership with in early 2014. Vendors including Xiaomi and Huawei have followed suit with similar partnerships when they launched new smartphones.
"E-tailers have opened additional avenues for growth for many vendors in India, who would have otherwise struggled to get a hold in the complex distribution network," she said.
Almost 30 percent of smartphones were sold through e-commerce channels in the second quarter, according to Counterpoint Research. Flipkart accounted for 56 percent of those sales.
The online strategy has paid off handsomely for low-cost Chinese smartphone manufactures, many of which are targeting India as the next big growth market as demand at home cools.
"Key to the success of the Chinese vendors has been popular flash sales through online players. At the same time, they also focused on bringing more 4G phones at affordable $100- $150 price points, which is left unattended by Indian and global vendors," Kaur said.
Lenovo, Xiaomi, Huawei and Gionee alone accounted for 12 percent of the India's smartphone market in the second quarter, double from a year ago, according to IDC. Massive demand in India has prompted Xiaomi to begin assembling its handsets domestically, instead of importing its wares. Its phones are being put together in a factory run by Taiwanese contract manufacturer Foxconn located in the southern state of Andhra Pradesh.
Other Chinese vendors such as Huawei and Oppo Mobile have said they want to "make in India". "Make in India" is also the name of the Indian government's push to boost domestic production and turn the country into a manufacturing powerhouse.
While not all smartphone companies are looking to manufacture locally, most are stepping up their focus on the fast-growing but cost conscious market.
Over the weekend, Google revealed plans to reboot its ultra-low-cost smartphone initiative, Android One, in India. The company launched a $105 smartphone under the project, which is designed to provide affordable and reliable Android handsets to consumers in emerging markets, in New Delhi last September, but it has struggled to take off in the face of supply chain issues among other factors.
The Mountain View-based tech giant plans to work with manufactures using Android to bring to market even cheaper devices to market, starting at 3000-4000 rupees ($47-$62), according to the Financial Times.