14 DAY TRIAL // iPhone X has recorded strong demand since its official launch in the majority of countries, but this doesn’t necessarily mean that retailers are happy about it.
In India, for example, a number of retailers have publicly criticized Apple for slashing iPhone X profit margin to as low as 4.5 percent, with some saying that it could drop to 1.5 percent in the case of card purchases.
While Apple hasn’t released any comments on its adjusted retail margins, it’s believed the company took this decision because it makes less money with the iPhone X due to the expensive components. It’s estimated that the cost of making an iPhone X reaches $370 only when taking into account the parts, while marketing and research and development would substantially increase the final price.
Samsung offering double the profit margin
But retailers in India can’t accept such a low margin, and Bengaluru-based Sangeetha Mobiles has decided to completely stop sales of the iPhone X in the country. This is quite a hit given that this retailer operates some 400 stores in India, and more companies could follow in their footsteps very soon.
“Apple has cut margins on the iPhone X from 6.5 percent to 4.5 percent for large retailers like us, and if a customer pays by card, which is usually the case, the margin reduces to almost 1.5 to 2 percent,” Subhash Chandra, managing director at Sangeetha Mobiles, was quoted as saying by the Economic Times.
“How on earth do they expect the retailer to work for them for free — our overheads are anywhere around 10 percent,” he continued.
Apple is the only company that substantially reduced profit margin lately, with all of its rivals going for a completely different approach in order to expand in the Indian market.
Samsung and Xiaomi are said to be offering 12 percent to 15 percent profit margin on each sold device, while Chinese companies like Oppo and Vivo have pledged to an even bigger amount, all in an attempt to sell more units and grow locally.
There’s no word on how the iPhone X sold in India so far, but given the limited supply, there’s a good chance the device is already sold out, with more units to be made available shortly given the increased production capacity.