In a shift from their previous stand of blaming e-commerce marketplaces, top distributors and retailers of consumer electronics and smartphones now squarely blame manufacturing companies for deep online discounts that have eroded their sales, and have threatened to stop stocking such products if the heavy rebates continue.
Brick-and-mortar stores allege that companies are either offering better prices to online platforms or not curbing supplies to them, according to three senior industry executives.
However, the manufacturers said they offer similar prices across all sales channels and that separate models have been launched for online and offline stores. Walmart owned Flipkart and Amazon maintain they only operate online marketplaces in India and do not determine product prices.
Sales of televisions, smartphones and appliances in brick-and-mortar stores were badly hurt during month-long festive season sales by Amazon and Flipkart from October to November. Several offline retailers claimed their sales had halved from levels during Diwali last year. In brick-and-mortar stores were badly hurt during month-long festive season sales by Amazon and Flipkart from October to November. Several offline retailers claimed their sales had halved from levels during Diwali last year.
Leading consumer electronics retailers across the country such as Viveks, Girias, Shahs, Sathya and Vasanth and the All India Mobile Retailers Association, which represent over 25,000 mobile phone retailers, have asked manufacturers to stop offering discounts online. They also want to be offered
the same prices and consumer deals as online retailers and new models to be launched in offline stores along with ecommerce sites.
The association said in a letter that mobile phone makers should offer similar specifications, prices, offers and launch dates for new smartphone models across all channels.
“The way brands are working with online, the preferred channel for better market share, the general trade would similarly like to work with the supportive brands for survival. The concrete boundaries between online and offline retailers need to dissipate before things get out of hand,” the association said.
An Amazon India spokesperson said the prices of products on its marketplace are determined by sellers. Amazon innovates to offer newer services to sellers that enable them to significantly reduce their cost of selling, which they pass on
to customers as lower prices. Flipkart did not respond to an email. According to Pulkit Baid, director of Great Eastern Retail, the leading chain in east India, the concern is over deep online discounting, which is an unfair trade practice.
“Brands are either directly indulging in this or they have tools to reign it which they are not using,” he said. Girias director Nitesh Giria said manufacturers should stop supplies and discounts to online retailers because the offline business is badly getting impacted due to this.
“What is happening in ecommerce is not fair play,” he said.
Kamal Nandi, business head at Godrej Appliances and president of the Consumer Electronics and Appliances Manufacturers Association, said companies do not fund discounts and they have created separate product lines for online and offline channels.
“Offline stores have a higher cost of operation and hence we support them with higher margins. Moreover, some of the offline stores themselves sell on e-commerce sites, which they should stop. We cannot stop anyone from selling anywhere since the online sites are all marketplaces,” said Nandi.
Tata-owned Voltas said the company always maintains parity among all channel partners, both offline and online. A spokesperson said offline contributes the maximum sales for them and online is an emerging channel.― Gadgets Now