Realme, Xiaomi and Samsung have been accused of diverting a majority of its handset stocks to the online channel to avoid giving margins to offline retailers and maintain profitability. Retailers said that their business is severely impacted due to the unavailability of stocks and falling margins.

“There is no stock available from Realme Narzo. They did give some stock but diverted everything online. Additionally, the C series is unavailable as well at a time when the demand is largely coming for sub-Rs 15,000 phones. It’s like an 80:20 ration between online and offline,” Arvinder Khurana, the National President of All India Mobile Retailer Association (AIMRA).

Khurana said that Xiaomi, India’s leading handset brand is also not supporting its offline partners. “They are rather selling it through their own online channel to save money 4-5% margin which they could have given to offline partners...their entire Redmi Note 9 series is missing from offline."

Seeing the trend in the market, even Oppo and Vivo have reduced their offline margins drastically.

“Walk-ins have dropped by 40-45%, while markets are on and off across the country, cash crunch for the consumer has also brought down sales in offline,” he said, adding that average selling price (ASP) has also dropped due to the unavailability of financing options.

“Whenever we reach out to handset brands they say that their business is impacted by the pandemic. They say there is a COVID-related loss, but they continue to sell phones online,” he said.

"The whole industry including Realme is facing a shortage of stocks as our factory is working at limited capacity due to COVID-19 situation. To ensure the health and safety of factory workers, we intend not to push for full manufacturing capacity in a rush and we are taking slow but safe steps, putting "safety first" as the priority," Realme India spokesperson said in a statement.

"We are supplying far less than the market demand. However, whatever quantity we can produce, we have been giving to all our offline partners on priority," the spokesperson added.

A Xiaomi India spokesperson, however, said that the brand has been maintaining supply and price parity between offline and online channels. "Stocks are being sent to retailers on a regular basis and the products are selling out very quickly both through online flash sales and offline retail stores. Our offline stock levels are ramping up very strongly.

Xiaomi said that while it has scaled up manufacturing throughout, the surge in demand has been much higher.

Due to concerns over potential COVID-19 infection, consumers prefer contactless purchasing and online channels. Smartphone brands are also recognizing this trend by pushing more inventory to online channels.

Mobile retailers recently wrote letters to Samsung to raise the issue of disparity between online and offline channels when it comes to prices of Samsung smartphones, and reduced margins.

Khurana said that Samsung is still not maintaining price parity for certain mid-range M-series smartphones like M21 and M31 and selling these devices at cheaper prices in the online channels. “The only series which is seeing traction is the M series, which is completely unavailable.”

AIMRA is again planning to write letters to all handset players on the inventory issue. Khurana said that in the absence of any support from the government, only handset players can provide support to offline retailers. “Retailers need to give salaries and pay rent for their shops.