Wednesday 30 January 2019

It's sale as usual: Amazon, Flipkart tell online-only companies

It's sale as usual: Amazon, Flipkart tell online-only companiesKOLKATA: Amazon and Walmart-owned Flipkart have told mobile phones, electronics and other companies, which sell their wares exclusively on these platforms, that they will be able to operate like they do now — albeit with some tweaks and rephrasing of agreements — once the revised ecommerce FDI norms come into effect.

Two senior industry executives said top officials of these two marketplaces have told the companies that while they can’t mandate exclusivity, the brands can still be exclusive to them as they are free to adopt their channel and sales strategy.

A rewording of the pacts that the companies have entered into with the marketplaces or the sellers would be required to make it clear the brands are exclusive to the platform as part of their sales strategy and the marketplace has no role in it, they said.

Changes to Ensure Onus of Exclusivity Lies on the Brand
As part of this, Flipkart has already replaced the phrase “#Only on Flipkart” for the exclusive brands or products prominently displayed on its marketplace with “#Just Here”. Amazon, too, has started to downplay the “Amazon Exclusive” tag displayed for the exclusive brands or models on its marketplace.

“All these changes are to ensure the onus of exclusivity lies on the brand rather than the marketplace. The marketplaces have taken extensive legal opinion, after which they have assured us that the exclusive brands can continue to operate like before,” said one of the executives.

An Amazon India spokesperson said the company has no comments to offer. An email sent to Flipkart did not elicit any response as of press time Tuesday.

Brands such as BPL, TCL’s iFFalcon, Blaupunkt TV, Sanyo, Thomson, Asus and Meizu operate only online in India through Amazon or Flipkart. Several leading brands and companies like Samsung, Xiaomi, Realme, Honor, Huawei, Onida, TCL, OnePlus and Vu have either launched online-exclusive models or are largely dependent on ecommerce.

The new FDI norms are due to take effect from February 1, unless the government decides to defer their implementation. The norms specify that any ecommerce marketplace entity will not mandate any seller to sell any product exclusively on its platform.

Manmohan Ganesh, chief operating officer of BPL, which sells its products only on Amazon, said the company’s exclusive relationship with the marketplace was a result of its own channel strategy and not dictated by the US company. “We have been assured by our partners on the platform that our exclusive channel strategy will remain since it’s our preferred strategy,” he said.

Avneet Singh Marwah, CEO at Super Plastronics, the licensee for Thomson TV brand, said it will remain exclusive to Flipkart, while complying with the terms of the new policy.

The spokesperson of TV maker iFFalcon said the brand will continue to be sold through Flipkart. “With this online-only model, we will continue to offer the best price directly from the brand,” he said.

Another stumbling block for online-exclusive brands is the clause which stipulates that “inventory of a vendor will be deemed to be controlled by ecommerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies”.

An executive said Flipkart has informed exclusive partners that it will appoint multiple sellers for these brands instead of one, as is done now, to comply with the 25% clause. Flipkart executives will also distance themselves from the planning of sales strategy for these brands.

“Amazon has already started such a process where it distances itself from any sales promotion planning of the brands. All such activities are now done by the seller team,” added the executive.

Executives from the marketplaces have met senior officials of online-exclusive brands to assure them that it will be business as usual when the revised FDI norms come into play from February 1, even as they have sought extension of the deadline by 3-6 months.

Online-focussed brand Realme has lined up a new smartphone launch next month exclusively on Flipkart while Samsung is debuting two mobile handsets under its new online-exclusive ‘M’ series for sales on Amazon.

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