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Retailers asking e-commerce players to rein in discounts is hypocritical and anti-consumer


Amazon India has been asked by electronic brands to offer discounts not more than 15%, during its ongoing Diwali sale, reports The Economic Times. Citing sources, the report says that these brands have asked that Amazon’s pricing shouldn’t go below the “landing price” i.e. the rate at which brick-and-mortar buys goods from them.

HTC India country head Faisal Siddiqui told the publication that they are asking Amazon, Snapdeal and Flipkart to stick to the recommended pricing, while Sony India managing director Kenichiro Hibi has reportedly sent a letter to a small retailers lobby All India Mobile Retailers Association (AIMRA) that they will be closely monitoring any undercutting and will take “appropriate lawful steps”.

Some companies are reportedly stopping fresh sales in case of Flipkart. Last month, Samsung decided to sell 48 smartphones offline exclusively, including the recently launched Galaxy Alpha and Note 4. This is after a spate of online exclusives from SamsungMicromax, Philips and Karbonn among others.

Why are retailers complaining now?

While retailers have been raising predatory pricing concerns for quite some time now, they are shouting about it from the rooftops now because its hitting them where it hurts the most: the Diwali shopping season.

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Consumers tend to postpone their bigger purchases to Diwali to get discounts and it’s quite common to see offline retailers competing each other to offer better discounts to consumers. So when online retailers are doing exactly what offline retailers do, why are they suddenly crying foul? It’s almost like warring factions coming together against a common enemy.

There is also some irony here: Future Group Kishore Biyani who positioned Big Bazaar as a discount store and offered deep discounts over long weekends and public holidays, from way back in 2006, is now accusing Flipkart of providing deep discounts to destroy competition.

Why are FMCG companies complaining?

What is also strange, as someone mentioned in a comment on Facebook, is why FMCG companies are getting worked up about it. Several consumer goods companies had raised concerns about Flipkart’s Big Billion Day sale alleging that the e-commerce major had dropped prices to an “unrealistic” levels. Consumers who bought online might not agree, though.

Why should it matter to them, as long as their products are being sold? They’ve used e-commerce to do exclusive deals to sell products ranging from mobile phones to cameras, electronics, apparel and even FMCG products like Coke Zero.

That’s because the offline retailers are threatening them, saying that they’ll boycott these products in their stores. The companies are buckling under this pressure, since traditional offline retail still accounts for a significant part of their sales.

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We feel that this protectionist attitude from consumer companies towards offline retailers has to change, else it could have significant implications for consumers, especially those in smaller towns who might have similar purchasing power but limited access to products and services. E-commerce enables these consumers to have better choice of products due to its unlimited shelf space and no geographical limits.

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