Every now and then, Nepalese consumers are complaining about the unreasonable pricing of the smartphones. When compared to the international market, or even sitting side by side with our neighboring country India, the prices of smartphones in Nepal seem to be inflated. If the phone is made of same material and specs, shouldn’t the selling price be the same in every part of the world? At first instinct, a wise man will probably think the same way. However, different factors come into play which one would have never been aware of. Here are the few major factors that you should be acquainted with on why you are paying more if you ever consider buying a smartphone in Nepal, rather than not asking someone from abroad:
Buying and Selling Practice
The way the smartphone companies sell their product is different from a different nation. For eg. Xiaomi sell their smartphones to India and China via online websites only since it has a strong online presence as well as online payment gateway is also well-built. This means Xiaomi don’t have to open luxuries offline retail stores which cut out the overheads such as rent, the salary of store staff and IT infrastructure.
However, when Xiaomi entered Nepal to sell their products, the number of online buyers are limited, and online payment gateway is a knee-slapper. Hence, the only way to sell their phones is to open offline retail stores in every nook and cranny of the nation. Investing in retail stores and official showrooms costs smartphone brand a fortune, and hence they have to keep up the selling price high to equipoise the profit.
The way Smartphone brand distributes their product is different from the different nation. While most of the Chinese brands such as Honor and Xiaomi, and even some Indian brands like Micromax, offer an exclusive deal on e-commerce portals like Amazon and Flipkart. This means a customer has no option but to buy from those e-commerce websites if he wants that phone dearly.
Signing an exclusive deal with an e-commerce website helps the smartphone brand to keep their prices low since they don’t have to worry about distribution at all. However, with the lack of major e-commerce website prevailing in Nepal aggravated by the lack of online buyers, there has to be a sizeable company that can channel the demand for the smartphone brand in selling their product all over the nation.
The national distributor after being chosen to be the authorized distributor, have to look for regional distributors for distributing the products to a different district of Nepal. The regional distributors take care of proving the products to sell to the retail shops. Each level of distributors have their share of profit, and hence the selling price upsurge.
Here’s a quick example, The Huawei Nova 2i is sold for Rs. 33,900 in Nepal, whereas almost the same device named as Huawei Honor 7X is being sold in India and US exclusively via amazon.com for just $200 (Rs.20,000). Since Huawei Nepal has no option but to sell its product offline via its national distributor with RD’s nicking off almost 15% commission and retail shops getting around 7-8% commission, this really adds up to hick the price.
Quantity of product sold
The quantity of the product sold in India, China, and the US are different compared to Nepal. While the smartphone brand ships in millions in big nations, there will just be 1000’s of units shipped in Nepal. This seriously affects the cost per unit of the product. It’s obvious that if you buy more, the cost will be less since there will be more offers and discount, and projection of demand.
In-House Manufacturing Plant
Countries like India and China has its own manufacturing plant (factory) which cuts off the custom TAX and transportation costs. For eg, Mi India recently set up a manufacturing plant and launched its first make in India phone, the Redmi Note 5A. The phone was priced aggressively at NRs. 11,200, the same phone costs Rs. 17,500 in Nepal.
All of these reasons contribute to making smartphones price higher in Nepal. What else could be the reasons? Leave your thoughts in the comment section below.