Why few brands are miffed with etailers, while few gladly form partnerships?

It is safe to say that the ongoing Diwali sales of etailers Flipkart, Amazon, Snapdeal, Shopclues and others has revived the Indian ecommerce industry after recent slump. The impressive (and slightly inflated) sales figures of these online biggies are there to see for all.

While the etailers are happy, some of the major brands like LG, Videocon and Godrej aren’t happy. Reason? They feel that in the bid to give the biggest discounts to customers, marketplaces are hurting their brand’s reputation.

Big brands blame etailers for diminishing brand image and sales

Brand owners of some of the big electronic products are worried that their reputation has taken a serious hit ever since etailers started offering their products at lower prices. The concern is that buyers will question why the prices of their products are different at offline and online retail outlets.

Industry expert, Devangshu Dutta of Third Eyesight said,

“When the price of a product is knocked down on a marketplace, for instance, it affects the brand’s perception in the consumer’s mind and also at the dealers.”

Manufacturers are not against online sales but against the pricing and believe that marketplaces shouldn’t violate government guidelines.

“We are open to do business with online platforms, but they should behave like an alternate sales channel rather than indulge in predatory pricing the way they are doing,” asserted Videocon’s COO CM Singh.

Offline retailers call online bumper sales as passing fad

It is not just online sellers who feel that festive sales were not all a success like marketplaces claim. Offline retail giants like Vijay Sales are of an opinion that such festive sales act as a temporary buzz created to last only for few days.

“Though consumers check for white goods and electronics online, the purchases are made offline, usually. The prices of the white goods and electronics are not hugely different to impact offline sales or market,” said Nilesh Gupta, MD of Vijay Sales.

According to Gupta, customers still prefer to buy big ticket items from offline retail stores because of after-sales service and warranty issues.  

What about the brands that happily tie-up with etailers?

IOS reported how ecommerce leaders Flipkart and Amazon relied on exclusive partnerships with brands and large appliances to earn big bucks during festive season. This means that some of the big brands are happy to ride ecommerce growth wave.

It appears that brands want two things: to sell online-only products through etail network and/or control over pricing of their products.

Bedraj Tripathy, Marketing Head of Godrej Interio elucidated the above point,

“We work with a lot of marketplaces. We deliver the products though it is sold online through a marketplace. Marketplaces do not have an inventory for our products. We don’t encourage a price advantage that goes against any of the channels through which our products are sold.”