Retailers in India are not happy about the way that Apple is reducing their cut of the new iPhone X handsets, by reducing retail margins on the device by close to 30 percent.
As a result, some retailers in the country — such as Bengaluru-based Sangeetha Mobiles, which owns 400 stores across India — have stopped taking orders for the iPhone X altogether.
“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, told the Economic Times.
Chandra notes that Apple already provides the lowest margins among handset makers. By comparison, brands such as Samsung or Xiaomi offer more than double the margin, at around 12 to 15 percent. Companies like Oppo and Vivo will offer even more than this to try and grow their presence in the company, although Apple has refused to do this — despite its desire to crack the Indian market.
“How on earth do they expect the retailer to work for them for free — our overheads are anywhere around 10 percent,” Chandra continued, referring to its margin cuts in India.
It’s not clear whether the same margin squeezing of retailers is going on in other countries, but it was previously reported that — despite its high price — Apple may actually earn slightly less per handset for the iPhone X due to its expensive components.
The same report notes that iPhone X supplies are limited in India, although it has reportedly received devices with greater priority than South Korea and Thailand.
Growing Apple manufacturing in India
While retailers in India may not be happy about Apple’s iPhone profit margins, a separate report claims that the Indian government is pleased with the way Apple’s Indian manufacturing has been headed in.
According to the country’s Commerce and Industry Minister Suresh Prabhu, the department is awaiting a formal proposal from Apple about expanding its manufacturing in the country.
“We will be very happy to receive Apple, one of the top brands in the world. We are willing to find out if there is any difficulty they may face. We will be more than happy to resolve that difficulty. So we will await a formal proposal,” Prabhu said.
Apple began manufacturing iPhones in India earlier this year.
