Indian mobile phone acces-sories market has grown substantially over the last few years due to a rapid growth in adoption of smartphones and tablets.
Neha Dewan | May 2016 Issue | The Dollar Business
Owning the latest iPhone isn’t enough for 18-year-old Siddhant Puri, a final year student of Amity International School Saket, New Delhi. He needs a big, bright and jazzy cover to safeguard and complement his new smartphone. And for Siddhant, there is no better area than Nehru Place, a prominent commercial centre in South Delhi and one of Asia’s biggest IT markets, to buy one for himself as it’s a place where he can opt from an endless range of phone cases – not only in vibrant colours but also in quirky designs – and make a loud fashion statement.
“There are a plenty of options available here. You can pick something in metal, rubber, leather or plastic; and they’re all quite economical! I buy at least two-three covers every time I come to Nehru Place. Recently I bought a couple of Seedoo covers for my iPhone and have been using them interchangeably,” chuckles the young school-goer.
With rising number of smartphone-dependent consumers in India, there has been a great demand for both functional and stylish mobile covers that define the persona of the smartphone owner. Thanks to this trend, dealers of mobile covers have found great potential in its trade. And not to say importing low-cost mobility device covers into India too sounds like a great business idea. “It’s a game of demand and supply; new models can fetch high margins while old models will have lesser conversions. Usually, importers operate with a margin of 10-15% for both silicon and leather covers,” says Vikram Arora, Owner, R. K. Accessories at Gaffar Market in New Delhi.
Going by industry data, the demand for imported mobile covers in India really started picking up in CY2011, when the import value of mobile covers and similar products jumped to $547.79 million from $339.16 million in CY2010. In CY2015, imports of mobile and mobility device covers stood at $643.21 million. While US, South Korea, Germany and Japan have been the major exporters of mobile covers to India, China remains the preferred source for imports. India’s love for ‘Made in China’ silicon mobile covers can be gauged from the fact that India imported $233.72 million worth of the product from China in CY2015 – almost a third of its imports.
Several importers, The Dollar Business spoke to, are sourcing mobility device covers mostly from China, particularly Guangzhou and Shenzhen regions. So, what makes China a preferred sourcing destination? “It’s easy to import from China, and there is a cost benefit. In China you will get iPhone and iPad covers for anything between Rs.20 and Rs.2,000, which is not the case with other destinations. Considering the fact that Indian customers are price sensitive, China is the best option,” says Arora.
Other mobile cover dealers in Nehru Place echo similar views. One of them is Jatin, who is now full-time into selling pre-used phones besides iPhone and iPad covers. “Considering the cost-benefit and hassle-free trade with China, most importers prefer sourcing from China. Besides the price advantage, mobility device covers from China are trendy and chic,” says Jatin.
While attractive yet economical Chinese mobile covers are proving to be a money-making business for Indian importers, the increasing competition from the dragon is hitting Indian manufacturers hard.
“Indian manufacturers are continuously facing tough competition from low-quality, unbranded products, especially from China. Chinese distributors have spoiled the market, but Indian manufacturers are learning to hit back. It may take them a while to stand on their feet though. In near future, Indian products will be more economical as compared to Chinese products because of the support from the Indian government,” says Rishi Raj Goel, Vice President – Business Development, Amzer, a mobile accessories manufacturer.
In addition, there are other challenges like logistics issues, increasing local competition, etc. According to some importers, a rise in demand has led to an increase in competition. A huge volume of cheap and fake products are easily available in local stores and grey markets. The challenge is to
simply keep evolving as the market and trends are continuously changing. With a few Samsung and iPhone models becoming many, with many new mobile brands being launched across all possible segments, the range has increased manifold. The consumers have their choices and moodswings, and the importers have to consider all these factors. Sometimes, flipcovers are in, while sometimes, bumper cases are all that will do.
Nevertheless, this trend of dressing up mobility devices is here to stay. Several studies highlight the growth of mobile accessories market, as much as the mobile phones sector, strengthening the prospects of mobile accessories trade in the country. As per a report titled ‘Mobile Accessories Market in India’ by market research firm Research & Markets, “India holds immense opportunities for mobile accessory products due to an enormous number of mobile device users and rapid growth in adoption of smartphones and tablets.” The study explains how declining mobile prices and rising incomes aid demand for new smartphones and mobile accessories.
Another industry report on mobile and tablet accessories market in India (titled, ‘Mobile and Tablet Accessories Market in India: Analysis of Growth, Trends and Progress 2015-2020’) highlights that in the coming years, the accessories market (including mobile covers, phone cases, power banks, chargers, etc.) in India will escalate further as a result of the growing tech-literate population and, of course, high-profit margins in the business. It further reveals that since factors such as increasing disposable incomes, technological innovations and changing consumer behaviour are driving the demand for mobiles and tablets, the accessories market will flourish.
"Status conscious consumers and the younger generation are fuelling growth"
The report states that status-conscious consumers and those using mobiles as a fashion accessory are those driving the accessories market. However, it should be noted that there are still millions of untapped customers in India who can contribute to the growth of the industry. Value-added applications and social networks are also accountable for the market’s growth as they spur the growth in sales of mobility devices. A report from Future Markets Insights [2015-2025] states that the mobile accessories market is expected to grow at a CAGR of 6.9% during the projected period. It explains how the uninterrupted drop in mobile phone prices supports the growth of accessories market. Increasing penetration of the Internet has only enhanced the trend of online retailing in mobile accessories. A lack of competition from the domestic manufacturers is yet another advantage that importers will continue to enjoy in the foreseeable future.
Such is the surge in popularity of mobile covers that several Indian companies are now joining hands with their international counterparts to stay ahead in the race. For instance, Delhi-based Molife Communications had recently tied up with a US-based mobile accessory firm to offer attractive mobile covers. Further, factors like high margins, low-entry costs have only fuelled growth of imports.
So, with no dearth of consumers looking for good, colourful, and cost-effective cases for their smartphones, and domestic manufacturing unable to satisfy demand, imports seem to be the only option. Are you game?
“We prefer sourcing mobile covers in bulk from China”
TDB: Why do you think there is a rising demand for mobile covers in India?
Yasir Siddiqui (YS): The demand for mobile covers in India is on the rise, mainly because almost everyone owns a phone. So, it has become more of a necessity than a luxury.
TDB: Can you tell us a bit about your sourcing strategy?
YS: Our priority has always been to find new avenues to source cheaper and better products, because that’s the only way to earn a decent profit. Nowadays people have also become extremely choosy when it comes to buying covers or accessories for their phones. So, the stern requirements of our consumers compel us to offer them more varieties and options. We prefer sourcing mobile covers in bulk from a wholesale market in China. Also, as a bulk importer, we get discount of up to 15%, especially on products that are ready for shipment.
TDB: If the demand for mobile covers is high, why are Indian manufacturers not capitalising on the opportunity?
YS: Although Indian manufacturers are using the latest technology, there are several problems that continue to plague the industry – especially plastic and rubber industries. Apart from this, our manufacturers are also not aware of the latest trends. For instance, if we are offered 10 options by an Indian manufacturer, we receive 50 different varieties from a Chinese manufacturer of the same product. So, I think our manufacturers need to focus on quality and variety if they want to compete against Chinese companies.
TDB: What kind of profit margins can an importer expect in this trade?
YS: Profitability in this business depends on several factors such as quality, variety, currency fluctuation, and demand. Going by the current demand scenario, an importer can expect a minimum profit margin, ranging between 5% and 10%. Since silicon and tempered glass covers are in vogue, we get anything between 15% and 20%. However, the market is becoming more competitive, so it can vary.
TDB: Do you have any hopes as far as the GST is concerned?
YS: At the moment, inter-state trade is a hindrance. So, I believe Goods and Services Tax can help us in many ways in improving our business.
TDB: What challenges do you face when it comes to manufacturing?
YS: First and foremost, lack of consistent power supply. No industry can survive without electricity. This is a big problem and the government needs to address it at the earliest. Also, the government should focus on easing credit facilities for people involved in export-import business – MUDRA scheme can help to an extent in this regard.
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