Offline retailers accuse OnePlus of offering lowest margins, delaying settlement claims

OnePlus 12, 12R

Chinese handset brand OnePlus has been accused by offline mobile retailers in the country of offering the lowest margins in the industry. The retailers also alleged that the company has delayed settlement claims and is not ensuring an optimum supply of its smartphones in the offline channel.

Retailers said that the unauthorised diversion of products from e-commerce to retail channels disrupts fund rotation and denies the exchequer the opportunity to benefit from added rotational GST.

“A significant portion of products in the market continues to be channelled through e-commerce platforms, accompanied by exclusive offers, sidelining mainline channels,” said Navneet Pathak, National Joint General Secretary at AIMRA, in a letter to OnePlus’ director of sale Ranjeet Singh.

Retailers alleged that bundling of OnePlus smartphones led to a noticeable disparity in availability and pricing between online and mainline channels.

“Such a focus on e-commerce platforms undermines the potential of retail channels to contribute substantially to the brand's growth in a legitimate manner, thereby hindering the realisation of stronger market positioning for the brand as a whole.”

He added that this problem has come up due to the lack of a straightforward brand approach supported by standardised retail operating procedures (SOPs).

A lack of SOP for retail has resulted in illegitimate business practices and detrimental distributor policies, including delayed product deliveries, partial supplies, and coercive bundling, he said.

“Consequently, retailers, lacking adequate brand support, are compelled to steer consumers towards alternative products, resulting in organisational losses.”

South Indian Organised Retailers Association Private Limited has separately written to OnePlus, highlighting the margin and claims settlement issues.

“The margin offered by OnePlus is the lowest in the industry. Running a store in modern trade incurs an expenditure of 8-10 percent, making it unviable for our members to sustain their business. It is worth noting that even Apple offers far better margins and provides 30 days of credit. We urge OnePlus to reconsider and increase the margin to double-digits,” Sridhar TS, president of the Organized Retailers Association (ORA), said in his letter.

Sridhar said the association’s members have also voiced concerns over the unsatisfactory settlement of claims.

“Claims have been pending for over six months. And despite assurances, no resolution has been reached. OnePlus' system and team lack the necessary support for timely claim settlements, leading to delays and discontent among our members. We urge OnePlus to take responsibility and ensure prompt claims settlement,” he said.

He suggested deducting the committed margins from the invoices until OnePlus’ SOPs and team are aligned for smooth settlements. “We also recommend dedicating additional resources to clearing all pending claims as of January 2024.”

In a recent interaction with Moneycontrol on January 24, Ranjeet Singh, Director of Sales, OnePlus India, said the brand was in touch with the association in Southern India and AIMRA. “We recently met them. We keep getting the feedback, and we will address them. Our focus will be on the mainland channel.”

Singh said that OnePlus planned to double its investments in mainline or offline channels in 2024, intending to add over 200 experience stores across India. This strategic expansion aims to tap into new customer bases in tier 2 and 3 markets to boost sales.

OnePlus has partnered with 16 modern and organized trade companies, including Reliance Digital, Croma, and Sangeeta. It is looking to tap around 50,000 new offline retailers.