Consumer fury over Flipkart’s Big Billion Day Sale Fiasco hadn’t even died down and it seems, Flipkart is in the crosshair of another group, this time, Consumer Electronic Companies. Which are appalled by the fact that consumers are able to buy their products at a huge discount, thereby leading to fewer sales in retail stores.
Now even though Flipkart is only selling products from these companies and thereby helping grow their bottom line, these companies aren’t happy. Because as per a senior official from leading electronic company, Flipkart is “”not playing fair. They are damaging our brand and killing the organized retail, which provides livelihood to lakhs of people.”*
While I am not sure how Flipkart can damage a brand by selling its products at a discount, but I guess they feel anyone who buys their products at a discount, is unworthy of owning their product.
Another senior executive from another company has said, “These goods are being sold through unauthorized channel partners, which is like buying from the grey market. How can we provide a service cover?”*
Once again, I am not quite sure how a product, being sold and marketed by an Indian Consumer Electronic Company can become a gray market product, if it is sold to end consumer by Flipkart, even though it remains a “white market product” if it is sold by an offline store. I mean it isn’t like Flipkart is importing container full of electronic products from countries like China and Taiwan, like most gray market vendors do!
Furthermore, I am not quite sure why these companies are jumping into this issue, while this matter at best is a dispute between Online and Offline retailers.
Also if these companies do not want their products to be sold below a certain price, why don’t they start publishing Minimum Retail Price along with Maximum Retail Price on their product, so that a consumer can see what is the maximum discount he/she can get?
As far as offline retailers are concerned, they really need to pull up their act, if they want to compete and prosper, without the protection of such companies. For starter, they need to stop fooling customers eg. quoting higher than MRP value of the product to customer, then making it seem like they are giving discount, even though they are selling at higher or similar price as company’s official website. They also need to start paying attention to customers service eg. if 4 employees chat while a customer asks repeatedly for something, wastes 5 minutes without getting any help and then walks out, then chances are he isn’t going to come back to store or for that matter recommend it to anyone else (both actual incidents, which have occurred with me. )
As far as companies are concerned, they need to start focusing on R&D, marketing and customer service, rather than worry about where a customer buys their product from!
*Source: Times of India.
one of the biggest scam in India is MRP. And thanks to our history of quasi socialism, which our mindsets still seem to be hungover with, do not seem to understand how markets work. Also, we (including big chiefs of a lot of Indian Companies) either dont or chose not to understand volume pricing and the cost of selling. Because vendor A has a streamlined supply chain, and volume commitments, vendor B, C, D cry foul, arm twist vendor A into not being able to sell at lower prices by bending some mickey mouse laws, ultimately making the customers suffer. the Idea of a minimum price is just ridiculous! WHO ARE YOU (who ever you may be) TO STOP ME FROM SELLING MY PROPERTY(inventory) AT MY PRICE(remember you sold me the inventory, you can not lie claim to it any more)
How did you come to the conclusion “I guess they feel anyone who buys their products at a discount, is unworthy of owning their product.” ? When did the companies say anything about the consumer? How do you know that Flipkart is not importing truck loads of goods from China? Consumer Electronic companies do need to protect their vendors. They still form a much larger percentage of their revenue. e-retailing is still a small pecentage of entire Indian market. However, it has a huge impact on prices because a consumer in any town can quote an online price. The cost of running a shop is definitely higher – rents and staff costs. Also, companies like FK are burning investor;s money. While the shop which does not pay attention to the customer, does not need your business, do you think it is fair when consumer do all their research – spend staff’s time in seeing demo of a product and go and buy online because it is Rs 100 cheaper?
While I agree that with a streamlined supply chain and eliminating middlemen will affect the end consumer price. The industry will change – stores would become more of demo places for products, would be owned by the CE company and they will consider the cost of running it as sunk cost if they know it’s driving their online sales.
I think Flipkart is a pioneer in what they do but unless they can turn profitable in next two years, it will prove that there are no free lunches which consumers are getting used to.
How do I know Flipkart isn’t importing products from China?
Because they sell products marketed by companies like Sony India, Nikon India etc. and not Sony China and that is why these products are eligible for warranty in India and that is why these companies are threatening to void the warranty of products, which are sold by them! If FK was importing stuff on their own, companies will be tearing it down as a place which sells gray market products!
As far as going to a shop, demoing a product and ordering online because it is Rs. 100 cheaper is concerned, few if any will actually do that. Because cost of traveling to a shop, parking and time would be more than Rs. 100. Of course if it is a substantial saving, then anyone would do that and rightly so.
Rs. 100 was a representative figure. Also, once you have seen the demo of the product, your have incurred the cost anyways whether you buy the product or not. So they see the product, they like it, they see the product online and see the price. If its lower, they order it online. Many do it.
Also, I asked: How did you come to the conclusion “I guess they feel anyone who buys their products at a discount, is unworthy of owning their product.”? Irrelevant now
If they cancel the warranties of their products and the vendors have valid sales receipts from these companies, I do not think the companies will be allowed to go scot free by these online vendors. Just wait and watch. Don’t Sue them yet.
I did buy a Rs 12K watch (still being sold by Casio retailers – so not an obsolete model) for 3.5K but the site clearly stated – it only has seller warranty. I took the risk knowingly and it worked out fine – atleast till now. I think similar model would come in CE retail as well. With manufacturer warranty: Prize X; w/o: Prize Y.
If FK is in fact buying from their Indian operations, I do not think CE companies would really take a strict action against FK because they are still making a sale for them. I think the prices offered by FK are not independent of the product’s pricing in the market. I had bought the Canon EOS M for 20K from FK (was almost the same on Snapdeal) and now its about 31K on both sites.
My only question is this – till when will this heavy discount season last? They should be able to have a sustainable, profit making operation without having to burn a hole in their pockets for retaining customers.
E-Commerce websites also incur a cost, when you visit their website. Servers, bandwidth, software to run them and people to manage them are all costs which e-commerce websites have to foot, irrespective of whether a customer purchases something or not. Add to that, people are more likely to browse such sites often and more extensively than they would visit a shop and demo a product.
If a company executive says that a retailer is damaging their brand, by offering discount on their product, what should I conclude the statement to be as a customer?
Nikon had done something similar a while back, you might want to read this post http://www.yogeshsarkar.com/blog/2013/09/30/nikon-vs-flipkart-gloves-are-off/. And that too when Flipkart was selling products which were marketed by Nikon India and carried Indian warranty. Of course it never went above a threat and customers, who buy from Flipkart and Snapdeal, can avail warranty from Nikon India. But such a statement did manage to make a dent in Flipkart’s sales as many people decided to go with offline route or Amazon and EBay, after reading it!
As far as the question of how long the discounts will last, well for me that is irrelevant. For me, online shopping is more of a convenience than a discount guarantee and I have at times paid slightly more for the convenience factor and ease of use.
So as long as the discounts last, I will be happy. However I will still be happy if the pricing is similar or maybe even slightly higher than market, if it saves me from the chore of commuting to a shop.
I can see vendor A and vendor B,C,D… here
Its a fair game
The one who manages to give the best offer makes a sale.
E-retail is the future,
Showrooms are better for garments which need changing rooms!
Arshad,in past couple of years, I have bought maybe 10% of my cloths offline. Online stores have better prices, more range (size as well as variants/colors) and exchanging something if the size isn’t right is quite simple and easy.
I personally am not comfortable with buying clothes online, as I always like to check fabric by hand.
Also it feels better to try as many on yourself before purshasing.
Coming back to the topic
Recently I bought Iris X5 phone from a retailer in NFC community centre.
Got it for rs300 lesser than any online deal!
This shows that retailers can compete if they are willing to.
What is the maximum amount for which a leading ecommerce site can be sued for ? The situation is misleading/false information on the website. Which court can be approached apart from Consumer Courts. Is any specific sort of lawyer required ?