Customers lined up in front of a cell phone store in Gangnam to get their hands on the new phablet. (image: Yonhap)
SEOUL, Aug. 31 (Korea Bizwire) – It has been almost two weeks since the Samsung Galaxy Note 7 was released. Yet, the unexpected popularity of the phablet has led to shortages, with many consumers still awaiting their new phones.
High demand for the phone has highlighted another issue, where smaller cell phone stores receive fewer phones from the telecommunications firms than major mobile phone distributors.
In Korea, telecommunications providers like SKT, KT, and LG Uplus are supplied with new phones directly from the manufacturer. They then distribute the phones to their franchise stores and other larger cell phone distributors, including chain retailers like Hi-Mart and Samsung Digital Plaza.
Smaller cell phone stores on the other hand, are among the last to be receive inventory from the franchises. For this reason, these stores tend to suffer from smaller inventories, particularly for high-demand products like the Galaxy Note 7.
According to the Korea Mobile Distributors Association (KMDA) on Monday, telecommunications firms “prioritize larger cell phone distributors in supplying the Galaxy Note 7,” and “discriminate against” smaller stores.
“This distribution trend that favors larger phone distributors worsened after the official launch of the Galaxy Note 7,” said an association official. “Small neighborhood retailers are out-of-stock with the product, and have put their customers on hold indefinitely, while major stores can offer the phones on site for immediate use.”
The KMDA official further added that “since smaller stores are delaying their supply of the products, they’re losing potential customers, which ironically is not the case for major distributors.”
“This clearly shows that telecommunications firms supply larger retailers prior to smaller phone shops.”
Telecommunications firms, however, denied the alleged discriminatory practices, citing that there is nothing that they can do since they have no contractual relationship with smaller retailers.
“The quantity of supply is determined according to each store’s pre-order performance, and because larger distributors tend to have better sales performance, they are provided with a larger supply,” said an official from an unnamed telecommunication company.
By Kevin Lee (kevinlee@koreabizwire.com)
