Apple is one of the most profitable brands among the smartphone makers. After the launch of the iPhone X, the Cupertino-based company is expected to expand its profitability thanks to the higher margins on the device but it seems that Apple does not want to pass on the benefits to retailers.
Apple has reduced the retail margin on iPhone X by almost 30 percent, a move that has affected both the large format chain owners and small-scale retailers. Many retailers believe that Apple doesn't want to share its profits with them. Bangalore-based offline retailers like Sangeetha Mobiles have stopped taking orders for the new iPhone X.
Apple declined to comment on the margin cuts and supply issues in India.
Brands like Samsung or Xiaomi offer more margin than Apple -- around 12-15 percent. Oppo and Vivo followed them to keep up with the competition, but Apple has refrained from increasing margins.
Moreover, retailers are also frustrated because of supply-demand mismatch. They complain that they have to face customer anger despite loss of margins. One retailer received only 400 units of the iPhone X in the first week since the launch, which he claims was not what Apple had promised him.
Offline retailers face a lot of challenges such as cashbacks and other discounts offered by online retailers making it difficult for them to compete.
In the September quarter earnings call, Apple CEO Tim Cook had said that "growing the market would require building stores, channels, markets, developer ecosystem and the right kind of product lineup."
Apple has to ensure adequate supplies and bring India up on its priority list in order to bridge the gap with its Android rivals.
