What Made Apple Push Back the Launch of Its Online Store in India?

One of the leading tech companies in the world, Apple Inc., has reportedly postponed the launch of its online store in India. It was earlier expected to launch in the first quarter of 2020. However, now the reports suggest that the launch will take place somewhere around the third quarter of this year.

While the launch of the online store of Apple is delayed by at least 6 months, the opening of the company’s first physical retail stores in India has also been postponed to next year. The news was revealed by the company’s CEO Tim Cook while he was answering questions at the annual shareholder meeting of the company in Cupertino, California this February.

What is causing the delay?

According to a report published in Economic Times, Apple needs more time to complete the back-end work as commented by two senior industry executives. The report also revealed that the idea is to roll out the service around a high sales period with the launch of new iPhones just before the festive season.

A few months ago, the Indian government eased the 30 percent local-sourcing norm in single-brand retail (SBRT). During the same time, Apple also expressed its interest in starting company-owned online and retail stores in India by saying they are “eager to serve” the customers.

Till now, Apple products are sold in the Indian market through third-party offline retailers and eCommerce platforms like Amazon, Flipkart and Paytm and other McDonalds Case Study. Reports suggest that the Apple executives weren’t happy with the platforms offering discounts on their products as it reflected poorly on the brand.

In the annual shareholder meeting 2020, while explaining the reason behind their interest in having a company-owned outlet, Cook (59) said: “I don’t want somebody else to run the brand for us.” He also added, “We wouldn’t be a very good partner in retail. We like to do things our way.” However, the Apple CEO did not shed any light on when we can see Apple stores in India.

According to reports, Cook is likely to visit India between June and July to have a take stock of the India business, involving the growth of its manufacturing plans, exports and the latest plan of launching company-owned online stores as well as brick-and-mortar Apple stores. As per the report, the offline store is most likely to open in Mumbai, next year.

As per the report published by TechCrunch, Apple is currently working on the logistics of setting up its online store in India. So, the tentative deadline has been set between July and September this year.

A report from Economic Times revealed that Apple still needs more work on its logistics and supply chain section to meet the global standards. It also highlights that the company’s Mumbai distribution center, which is operated by DB Schenker would serve as the hub for the company’s online store.

Reportedly, the company has leased space of 20,000 to 25,000 square feet for their first brick-and-mortar store over three floors in the Maker Maxity mall in Mumbai’s Bandra Kurla Complex (BKC).

Apple’s current position in India

In August 2019, when the company showed interest in opening their stores in India, the company issued a press statement, where they expressed that they appreciate the support and hard work by Indian PM Modi and his team in making this possible. They also mentioned that they look forward to welcoming the customers to India’s first Apple retail store.

In the statement, the company also admitted that they would require some time to get their plans underway. They also mentioned that they would have more to announce at a future date. However, they avoided revealing any concrete timeline.

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During the company’s earnings call in January, Cook underlined that Apple registered double-digit sales growth in India for the iPhone models during the holiday period (October-December). The company also registered total revenue of $56 billion from its iPhone sales on a global scale.

India is the second-largest market for smartphones in the world. However, Apple has been struggling with its online retail for the past few years. Thanks to the decision made by the Indian government, the company can now start their own online retail store in India. Prior to the government’s policy change, Apple had requested the government to relax the local Foreign Direct Investment (FDI) rules.

In January, research firm Canalys revealed that Apple shipped around 925,000 iPhone units in India in the last quarter of 2019. It was up by 200% annually, making it the most impressive quarter in the country to date.

Madhumita Chaudary, who is working at the research firm, said that the company’s decision to associate with a localized bank to make iPhone 11 available at a lower price helped the company hit “a home-run with its pricing strategy”.

Challenges faced by Apple in India

Currently, iPhone 11 is available in India at 64,900 INR, i.e. $909. However, some HDFC bank customers can buy the phone at a price as low as $550. In a country, where the monthly income of more than 80 percent of the popular is less than $200, it is definitely tough for Apple to sell its product. Moreover, local import taxes raise the price of iPhones in India.

While the Indian government maintains strict import duties on brands, it also offers a number of benefits to companies that manufacture or assemble their electronic products locally. This is the reason why the company has started to assemble iPhone 7 models in India in 2018. The iPhone XR is also locally assembled and is comparatively affordable.

Quite evidently, selling comparatively affordable iPhones in the Indian market can make a significant impact on the revenue of the company in India. With the introduction of company-owned retail stores, it will be easier for the company to make the necessary adjustments in their pricing strategy. However, with the recent COVID-19 crisis happening all over the world, the launch may get delayed even further than expected.