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Indian govt to look into Flipkart’s Big Billion Screw-up

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Indian government is looking into Flipkart’s “Big Billion Sale” campaign following several complaints from traders, reports Livemint.

Commerce and Industry minister Nirmala Sitharaman mentioned that they have received many complaints from traders that such campaigns would badly affect traditional retailers. Following this, they will take a call on whether e-commerce businesses should provide more clarity or it requires a separate policy altogether. This follows a request from Confederation of All India Traders (CAIT) earlier this week, to probe the business model and trade practices of e-commerce companies to get a sense on how these companies were offering huge discounts during the ongoing festive season. Merchants, both small and big, who have been voicing predatory pricing concerns for quite some time now.

Consumer Goods companies also complaining

A Times Of India report from earlier today suggests that several consumer goods companies like Samsung, Sony and LG have stopped fresh sales to the online retailer until they receive an undertaking that the prices will not be dropped to “unrealistic” levels. LG Electronics VP (Sales) Sanjeev Agarwal told the publication that they don’t deal with e-commerce retailers directly and also not the company’s authorized trade partners.

That’s probably because Flipkart, Snapdeal and Amazon are marketplaces wherein they enable sellers offer products to consumers rather than providing products directly. Several companies like Nikon, Asus and Dell among others have previously dropped e-commerce retailers as authorized retailers and has issued advisories warning users against buying products from the site. However, these sites have maintained that products sold are genuine and customers will continue to enjoy the warranty and services as before.

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That being said, TOI mentions that one of the major appliance retailers is also considering pulling warranty from some of its products which could act a big deterrent for consumers to make online purchases. It also notes that some are contemplating legal action against the company on grounds of predatory pricing, since these companies believe e-commerce retailers are damaging their brand.

Consumer Issues Are More Important

While Flipkart reported significant sales in this campaign ($100 million GMV in 10 hours), it seems to have pissed off consumers with this sale. Consumers faced various issues like site crashes, marked-up prices, cancelled orders and out of stock deals among others, which led to the company sending an apology mail to all consumers albeit a bit late.

Price Changes: A report alleged that Flipkart did the oldest trick of marking up the prices before the sale. However, in the apology mail, Flipkart founders mentioned that in the lead up to the sale, the pricing of several products got changed to their non-discounted rates for a few hours. They said – “We realise that this breaks the trust our customers have put in us. We are truly sorry for this and will ensure that this never happens again.”

Out-of-stock issues: The Flipkart sale started at 8 am, however several deals went out of stock within minutes, leading to users wondering what products were actually available for sale. Flipkart founders claimed that they had ensured availability anywhere from hundreds to a few lakh units for various products but they ran out of stock for several products within few minutes and even seconds in some cases.

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Cancelled orders for equal opportunity: Several people witnessed that their orders were cancelled without notice so as to provide all consumers with an equal opportunity. Flipkart founders mentioned that this was due to a large number of people buying specific products simultaneously which led to several instances of a product getting booked that was already sold out just a few seconds ago.

No Intimation of order confirmations: Several users faced issues of not receiving any order confirmations via SMS or email.

Order history wiped: Several users also witnessed their previous order history completely wiped from their account until the sale was closed.

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Delayed apology: While Flipkart founders did send a honest and candid apology letter to all users, it was delayed by a day. The initial statement from the company only boasted about the “overwhelming response from customers”, the billion hits it registered and that it achieved its 24 hour sales target of $100 mn in GMV in just 10 hours. There was only a hint of acknowledgement of the site errors which were being addressed by its technology team. However, it’s possible this happened …

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Apology for sellers? Flipkart however seem to have forgot sending a similar apology letter to sellers, as indicated by iamwire which apparently received letters from several Flipkart sellers.

Some of them alleged that they were kicked out so that only WS Retail goods were visible primarily, while some alleged that their account status was changed into pending wherein they need to clear the existing list of orders placed by customers so as to receive new orders.

A similar open letter sent by a Flipkart seller to NextBigWhat suggested that he received 4x more orders as compared to a regular day but his account was put into “Account deactivate” mode since he received more orders than usual and he wasn’t able to process these orders due to a dead slow seller panel.

Cheekily, several companies also jumped to make use of Flipkart’s failed opportunity for its own publicity:

– Competitor Snapdeal released a jacket ad in major dailies saying “For others, its a big day, For us, Today is no different”. It also ran offers throughout the day, competing with Flipkart.

Future Group released an ad the following day, saying that “No deal can win the trust of billion people. You have to earn it. You can’t take the nation for granted even for a day”. Interestingly, Future Group CEO Kishore Biyani also told in an interview to DNA on the same day that online retailers will remain in business until they get funding and are able to offer discounts. He also pointed out online retailers are spending huge sum on advertising and customer acquisition. “We really wished we had that kind of cash to burn”.

– Poking fun at Flipkart’s constant 404 error, Dominos India released a poster saying ‘No 404 error’

– Taking a dig at e-commerce major’s marked-up prices and out-of-stock issues, FreeCharge CEO Kunal Shah posted an update – “Tired of marked up and Out of Stock offers? Recharge on FreeCharge app today and get an assured ₹20 cash back. BTW, we never go out of stock.”

Updated: It looks like packing material also went out of stock at Flipkart …

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