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Offline brands and retailers miffed with ‘Big Billion’ sale

By FashionUnited

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The leader of India’s e-commerce play, Flipkart, opened doors to their much touted ‘Big Billion Day’ on October 6 at 8 AM, calling it as ‘the sale to end all sales’. While the e-tailer is tom-tomming about the success of their mega-deal day, neither customers, nor leading brands are happy.

In fact offline retailers and brands are accusing online platforms for spoiling the sale opportunities envisaged by them around the festive season.

Whil

e the country's largest listed retailer Future Group has said that the big bang sale strategies being adopted by online platforms is anti-competitive for selling products below cost price, merchants selling wares on these marketplace models have said that the e-commerce platforms are forcing them to sell products much lower than their actual buying price that are adversely affecting profit margins.

Apparel retailers and trade bodies highly concerned

Expressing his concerns over the highly uncompetitive sale strategy by online platforms such as Flipkart, Kishore Biyani, Founder of the Future Group said such a practice is legally not allowed in the country and there will be a movement by brands and retailers that will criticise these online retailers. According to him, e-platforms cannot misuse foreign funding in killing competitive nature of the retailing business.

Even traders body CAIT has asked the Commerce and Industry Ministry to take steps to monitor and regulate online businesses. In a letter to Commerce and Industry Minister Nirmala Sitharaman, National General Secretary of Confederation of All India Traders (CAIT) Praveen Khandelwal demanded, setting up of a regulatory authority for e-commerce business in India.

“We invoke your kind and immediate attention to ongoing sale offers conducted by various e-commerce companies since last three days...they are offering discounts from 20 percent to 70 percent, whereas traders are forced to sell same products in offline markets at a higher prices since their purchase price is on a very higher side,” he mentioned in his letter.

He added further, saying, “Such a practice if continued, may result into unavailability of products in offline market which will further result into a monopolistic situation which will be controlled and dominated by the e commerce retailers. In the present case, the traders are in a disadvantageous position and cannot compete with online retailers.”

On the next day of Flipkart’s ‘Big Billion’ sale, Future Group released an advertisement saying no deal can win the trust of a billion people and one has to earn it, mocking deep discount deals offered by online shopping portals. It further mimicked the technical glitches that caused cancellation of orders saying, “You can't take the nation for granted even for a day. Future Group stocks enough for everyone to buy and gives genuine offers and sales.”

Vendors seek policy to regulate online pricing

Several e-commerce companies including Amazon, Flipkart and others are under probe for utilizing foreign funds garnered by them into retail operation, which is not allowed as per the current FDI policy. Vendors selling their products online allege that big e-tailers like Flipkart are enjoying venture capital and FDI funds, while forcing them to sell at heavy discount rates. On top of that, the vendors also have to bear expenses towards delivery, shipment and return, further reducing their profit margins.

The Online Vendors Association of India now plans to initiate a measure to combat their woes by creating a forum for online vendors and develop a clear online vendor policy to regulate pricing and avoid such price disparity since online stores, because of their unfair business practices are killing the regular normal business of a vendor. Offline retailers cannot match the prices being offered online and ultimately vendors are bearing the brunt of discount policies of these e-platforms.

On the other hand, brick-and-mortar retailers too have alleged that it is impossible to match the online offers and they don’t event intend doing so. They feel that shoppers will come to buy new arrivals unveiled for the festive season, so they would be able to witness good sales on new merchandise, since customers generally spurge on shopping during the festivals.

Most like Future Group, Lifestyle International, Arvind Lifestyle Brands among others are currently running their festive period offer, with usual deals and discounts. They have not adopted deep discounting method to compete with online retailers.

Worse is yet to come for e-tailers. After the bumper 'Big Billion Day Sale' by Flipkart, electronic majors like Samsung, Sony and LG have decided to suspend their future sales on the platform, while considering legal action for ‘predatory pricing’. They are of the opinion that Flipkart's strategy will make a negative impact on offline retail. To avoid such instances in future, brands have decided to suspend supplies to Flipkart till the time they get an undertaking that prices will not be slashed to ‘unrealistic’ levels.

After spending exorbitant amount on advertising and preparing their platforms for deal-days, did Flipkart, Amazon and Snapdeal actually benefit from it? Looks like offline retailers are up in arms to take on the online retail war. Who will succeed? Times to come will have an answer…

Flipkart
Future Group