Retailers dial smartphone makers over delay in claims settlement – Technology News

Smartphone makers such as Samsung, Oppo, Xiaomi, Vivo, and realme, on Friday received communications from over 150,000 mobile phone retailers across the country over delay in claims settlement.

The retailers, through the All India Mobile Retailers Association (AIMRA) have asked the the manufacturers to settle claims which includes retailer margins, upgrade offers, cashbacks, freebies for consumers, etc, required to boost smartphone sales – within 15 days of the end of such scheme or offer, and the date effective price drops.

The issue assumes significance in the sense that retailers face a significant challenge with their money getting blocked in claims, leading to substantial delays of 30-90 days in getting their dues. This in a way blocks their working capital, thereby affecting their financial position.

“In the current challenging market competition, retailers are facing increasing expenses and insufficient margins. They must receive timely and honest claim settlements within 15 days to support their business operations,” said Kailash Lakhyani, chairman of AIMRA in communications to the smartphone brands.

According to Lakhyani, if a retailer is doing business of Rs 1 crore in a month, around 8-10%, that is Rs 8-10 lakh of his or her money gets blocked in claims which includes commissions, sales out, upgrades, bump-ups, temporary price drops, etc. The same gets further piled up.

Smartphone brands usually list out offers to boost their sales, for which they reimburse the retailers. Besides, there are certain sales incentives, which smartphone retailers get from the companies on selling their phones to the consumers. Any such retailer claims are usually adjusted from the bills of retailers – the amount which retailers owe to smartphone companies – for purchasing inventory.

Besides expediting the claims settlement process, retailers have also urged companies to maintain transparency through their portals or apps with regard to the amount of such settlements.

According to Counterpoint, Samsung was at the top spot with an 18% market share in 2023, followed by Vivo with a 17% share, Xiaomi at 16.5%, realme at 12%, and Oppo at 10.5%.

Currently, offline channels constitutes 55% share of the market driven by consumers’ preference for the ‘look and feel’ of the device, according to Counterpoint.

Earlier this week, it was reported that over 5,000-6,000 mobile phone retailers, largely in Maharashtra, had asked Samsung to settle their claims worth over Rs 50 crore, which have been pending since last one year.

Besides a delayed claim settlement process, retailers have also flagged concern over changes in distributors by the smartphone companies without taking any no-objection certification (NOC) from retailers. An NOC will help retailers to clear their dues before a distributor is changed by the company.

Lately, many chinese companies are in the process of replacing chinese distributors with Indian distributors. Following the move, the retailers have urged the companies to ensure that the process does not disrupt the supplies and claims. On Monday, retailers are also expected to meet Vivo, with regard to the changes being done, industry executives said.