Direct Online Sales Booming For Samsung, Profits Surge
Samsung Electronics has seen profits surge after consumers flocked to buying direct from the Korean Company who has also moved to target value market spanning TV’s and smartphones.
Despite COVID-19 the Company has delivered one of its best quarters after pivoting its business in Australia and several other Countries toward lower-cost digital sales channels in the middle of a pandemic.
This has led to a surge in online sales which has seen Samsung offer a 50% discount in some markets for a consumer to buy direct.
Operating profit in the third quarter surged 58% on the year to A$14.75 billion, the company said last night in what was its strongest finish in two years.
Smartphone sales are believed to be the biggest contributor to the growth.
Samsung shipped 80 million smartphones in the quarter, up 50% from the previous quarter, bringing the company back to pre-coronavirus levels.
In places like the U.S., there are cases where the company’s website offers handsets at a 50% discount if the customer signs up for a loan and meets other prerequisites.
Samsung web sites were initially designed for showcasing products. Now the Company has expanded the chat features on the site to guide customers through to completing a purchase.
Samsung has also launched major campaigns offering generous discounts with Amazon.com and other online retailers, as well as with carriers and retailers such as JB Hi Fi who are generating a large percentage of their sales in Australia.
ChannelNews has been told that online consumer sales, of which their Samsung Galaxy range from a large part, accounted for 40% of all global sales in the third quarter.
New product announcements have gone virtual as well. Even when pricing in expenses associated with online sales promotion, “marketing costs were held down,” said a securities analyst.
The coronavirus pandemic spurred the shift online. “We will accelerate it going forward,” said a Samsung executive.
On Thursday, Samsung released the Galaxy F in India, a series geared toward online sales channels, this is a move that has hurt Oppo, Realme and Vivo after Indian nationals moved to buy cheap Samsung products over Chinese branded devices.
Equipped with three cameras, the Galaxy F is available for sub $250.
This price point puts the smartphone well below other flagship devices.
India is the world’s second-biggest smartphone market, with nearly 50% of phones being purchased online due to the prolonged lockdown. Samsung appears to be planning to expand the phone to other countries based on the response from Indian consumers and the establishment of a new manufacturing automated smartphone facility in India.
In the second quarter, Huawei Technologies pulled ahead of Samsung to become the world’s leading smartphone Company, but they were quickly overtaken when US bans kicked in.
The Chinese heavyweight was hit with additional sanctions by the U.S and are now desperately trying to shore up the local Chinese market ahead of a major assault by Samsung next year.
Another problem for Huawei is that they are now unable to install updated Google apps on its phones since May of last year, its share in markets outside China has dropped off.
Huawei’s second-quarter performance was mainly credited to the speedy recovery of the Chinese market after the coronavirus outbreak.
The prospects of China’s Xiaomi Oppo, Realme and Vivo are clouded by product boycotts in India due to the deadly Sino-Indian border conflict.
In June, Samsung reclaimed the title of India’s top smartphone seller from Xiaomi, according to Hong Kong market researcher Counterpoint. Samsung has reportedly kept the crown for three straight months.
Apple usually announces its new iPhones in September, but complications in procuring components have delayed this year’s event. With both Chinese and U.S. competitors hitting snags, Samsung is free to rebound from the coronavirus impact, thanks to its successful online sales strategy.