In a frank admission, the Vice President of Samsung’s mobile operation has admitted their online operation is growing and that consumers are starting to rent and lease mobile phones, a move that benefits brands over carriers and direct sell retailers.
In an exclusive interview with ChannelNews ahead of tomorrow’s official launch of a new Samsung S22 range and a new Samsung Galaxy Tab 8, Gary McGregor said that while retailers and carriers are “vitally” important to Samsung, their direct business has grown during COVID.
He said that with the launch of the new Galaxy S22 smartphones and new tablets, Samsung is set to release a major multi-million dollar marketing campaign that will drive traffic to retailers and carriers.
He revealed that the local Australia subsidiary, which has one of the highest penetrations of the premium smartphone market in the world per head of capita, is often in the top 10 and even the “top 5” in the world at the South Korean Company.
Locally, the market for smartphones has gone soft with Chinese brands such as Oppo, Realme and Vivo falling in some cases by up to 30%.
Despite the launch of new Flip and Fold Samsung Galaxy models last year, McGregor said in 2022 “the mobile market is going backwards”. He estimates that the market is down 8% overall this year.
A surprising admission was that the new Samsung Galaxy Z Fold, which is selling for $2,499, is outperforming the cheaper $1,499 Galaxy Flip.
McGregor said that work-from-home executives were buying the more expensive Fold because of the better management of apps and the ability to easily conduct conference calls from the device, which has a large screen.
“People, primarily because of COVID, are mixing their business and social life and the Fold is a product that toggles and delivers in both areas and was ideal when it came to multitasking.” he said.
McGregor estimates that Samsung’s online business has grown between 30 to 40 per cent during the past year.
One area of growth for Samsung is their ‘subscription’ offering, which allows consumers to pay a monthly fee and then trade up to a new device.
The service is only available via the Samsung web site, which is also offering consumers trade-in deals on older Samsung smartphones.
A visit to the Samsung site reveals that consumers can now trade-in up to two eligible devices at the same time. They can also add tablets into the bundle, a move which Samsung claims is an “easy way to grab a greater trade-in credit for a new Galaxy smartphone or tablet of your choice”.
During the past year, several big brands have thrown money at retailers and carriers only for their new products to struggle.
A classic example, claim observers, was Google, who funded retailers and carriers millions in marketing dollars for isle ends and in-store merchandising in an effort to get traction for their Pixel 3 smartphone.
The investment failed to deliver the growth Google expected from their marketing millions.
Also cutting back on their retail incentives is Oppo, who have been accused in the past of “buying market share”.
As one observer said, ”The marketing dollars have dried up for retailers and carriers and they (the retailers) have gone back to pushing the brands that sell – Samsung and Apple”.
Analysts that ChannelNews have spoken to claim that both Apple and Samsung are going to take share away from their retail partners via their online operations or their own stores going forward.
“It’s happening and the Australian CE retailer has to operate a lot smarter,” said one.
At CES 2022, ChannelNews was told that, globally, Samsung has seen a 30 to 40 per cent jump in consumers buying direct.
Recently, Apple has been delivering stock to their own stores and selling direct at the expense of retailers.
Last week, a former JB Hi-Fi executive tried to buy a Dyson stick vacuum cleaner at three key retailers, JB Hi-Fi, The Good Guys and Harvey Norman. “They were all out of stock,” he said.
“I finally bought it online at the Dyson online store and it was delivered 36 hours later.”
