Yandex Can't Agree with Retailers on Sales of Its New Smartphone

Yandex is discussing sales of its smartphone with retail chains of mobile operators and the M.video-Eldorado group. Agreements have not yet been reached: the company insists on a minimum markup on devices, but retailers are not satisfied with the low margins of sales of the gadget, Vedomosti writes .

Details

• According to the newspaper, Yandex wanted to import the first batch of smartphones, approximately 20 thousand devices, to Russia in the fall. At the start of negotiations with retailers, the price of the device was 14,990 rubles, but due to the dollar exchange rate it increased to 16,990, says one of the newspaper's sources. Another one claims that the price of the gadget eventually rose to 20 thousand.
• It has not yet been possible to reach an agreement on sales with Yandex - the company wants minimal markups on its smartphones. According to various sources of Vedomosti, this is no more than 3%-5% or 8%. Retailers are not satisfied with such low margins.
• Representatives of the retailers confirmed the talks but declined to disclose further details. Yandex said it does not comment on rumors.
• A yield of 3%-8% is a very low figure for such a local smartphone brand, says Mobile Research Group leading analyst Eldar Murtazin: an acceptable figure in such cases is 30% or higher.

Context

• The Yandex smartphone was first announced in July — the company registered a product in the register of the Eurasian Economic Union under the name “Yandex.Phone Smartphone, Yandex trademark,” with the company’s Swiss subsidiary listed as the manufacturer. No specifications of the device were disclosed, but analyst Murtazin wrote on Twitter in March that he had seen documentation for the Yandex smartphone and claimed that it was a Chinese-made device costing 20-25 thousand rubles. Vedomosti’s sources say that the gadget’s parameters correspond to those of Chinese smartphones in the 10-12 thousand ruble price range.
• Yandex obviously wants users to have a smartphone with the maximum set of its services, says Telecom Daily CEO Denis Kuskov. However, the expert explains that a batch of 20 thousand devices (28 million smartphones are sold in Russia annually) is very little: retailers will not cooperate with brands that sell smartphones in small batches, even if it is Yandex. A brand must supply several million devices to the market per year, and only with such a significant market share does cooperation with it become attractive, explains Kuskov.

Artem Gubenko