Offline stores will take action against brands if they don’t curb online discounting or stop launching online-exclusive models at lower prices. With Amazon and Flipkart back to normal as their large sellers have resumed operations, brick-and-mortar stores selling smartphones, computers and consumer electronics fear deep discounting may continue in ecommerce.
This follows a brief period when some online marketplaces had to make changes to conform to revised ecommerce FDI norms that came into effect on February 1. It also marks the revival of hostilities between offline and online over cheaper prices.
Cellphone retailers have decided they will not sell any brand that offers online discounts. Those that sell IT products said they have struck a deal with top brands including Dell, HP, Lenovo, Acer and Asus to sell products at the same prices as those online with any losses being made good by the manufacturers. Consumer electronics retailers are also worried for similar reasons.
Brick-and-mortar groupings that represent 70,000 outlets across the country were among those seeking curbs on FDI-funded ecommerce in India because of what they said was predatory deep discounting that hurt their sales. Leading cellphone chains such as Sangeetha, Poorvika and Big C have decided that they will not sell the online-focussed brand Realme.
“Offline cellphone stores will not cooperate with brands if they continue to launch online-exclusive models at lower prices than what is available offline or if models are sold at a discount online,” said Arvinder Khurana, president of All India Mobile Retailers Association (AIMRA), which represents over 25,000 stores. “Retailers are forced to take this course as it has become a matter of their livelihood.”
Federation of All India IT Associations (FAIITA) secretary Saket Kapoor said it has entered into an agreement with large manufacturers on pricing parity.
“The agreement includes no scope for any online-exclusive model and if the manufacturers do launch them, they have to offer it to offline trade first who have the right of first refusal,” said Kapoor. The group represents more than 30,000 IT retailers across the country.
Cellphone and computer brick-and-mortar stores were the worst hit by online discounts in the past four years with AIMRA and FAIITA saying prices of these products were 35-40% cheaper on the marketplaces.
Sangeetha Mobile managing director Subhash Chandra said the chain has decided not to sell Realme smartphones, since the online-focussed brand is offering extremely low margins. Sangeetha Mobile is the south’s leading cellphone retail chain with 600 stores.
Offline retailers had cheered when the government revised the FDI in ecommerce policy in a move that was aimed at providing a level playing field.
While operations in Amazon and Flipkart were briefly impacted when the revised norms came into effect on February 1, the marketplaces subsequently came back into business by rejigging their structures to be compliant with the revised policy. Even large sellers like Cloudtail and Appario returned to Amazon.in after changes in their shareholding structure to become compliant. The marketplaces have started running discounts since then.
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