Private labels war – Sellers ask Flipkart, Amazon, ‘Are you marketplace or retailer?’

For online ecommerce biggies Flipkart and Amazon, private labels are the next battleground.Both have launched their own set of private brands across various product categories to become profitable.

Flipkart has eyes set on Big Billion 2017 and for the same, special emphasis is being put on its private brands. In one of his interviews, Adarsh Menon, VP & Head, Private Labels at Flipkart revealed the marketplace’s plans for its own label Smart Buy.

“Our plans for the next four months under the umbrella brand of Smart Buy itself…is to launch a very big range of home products and also some other important categories (including things like) selfie sticks, mouse, keyboard etc… All in all if we look at the umbrella brand of Flipkart’s Smart Buy the end of August, the brand would be present across 35 categories,” said Menon.

Amazon India too has labels like Amazon Basics, Solimo, Symbol and Myx. The US-based etailer wants to replicate the success of its private label strategy in India as well.

Should marketplace sellers worry?

If private labels would dominate the marketplaces’ product listings, then wouldn’t it affect the lakhs of third-party sellers? Sellers have the same concern.

In March this year, sellers’ lobby group All India Online Vendors’ Association (AIOVA) had approached Competition Commission of India (CCI) to express their displeasure against Flipkart and Amazon undercutting sellers.

“Marketplaces like Amazon and Flipkart are exploiting sellers sales and product information and sharing this with sister companies and their own private labels which is resulting in financial benefit to such parties. Ad properties and user targeting which is normally charged exorbitantly to sellers is doled out free to these parties, leading to unnatural reduction in cost of selling,” stated AIOVA’s spokesperson.

Needless to say, vendors are miffed

In the past, Flipkart and other marketplaces have avoided commenting on sellers’ concerns over etailers’ private brands. But this time Menon chose to reply.

He said,

“Ultimately the concern is that the consumer should be happy with the product. If somebody is there who has to worry about private labels, it is the people who are selling average or poor quality products online.”

Menon’s comment that implies ‘only vendors selling poor quality products should worry’ hasn’t gone down well with the online sellers’ community. It reflects that Flipkart has conveniently decided to ignore the questions related to predatory pricing, using sellers to extract data about consumers’ likes & dislikes and visibility. The Indian etailer has reduced these valid concerns to ‘only those with bad products have problem with our private labels’.

Indian Online Seller asked AIOVA to react on Menon’s statement. AIOVA’s spokesperson says to IOS, “Is Flipkart a marketplace or a retailer? Such statement clearly indicates future of sellers is not bright.”

Sellers, do you agree? Are you worried about Flipkart’s and Amazon private labels? And what would you like to say about Adarsh Menon’s statement?