Monday 3 June 2019

I am forced to go to court to protect our brand equity: Vishal Gondal, GOQii

I am forced to go to court to protect our brand equity: Vishal Gondal, GOQiiGOQii has taken online marketplace Flipkart to court over deep discounting, and received a stay order, preventing Flipkart from, in the interim, selling the products. Vishal Gondal, Founder, GOQii, talks to ETNOW about the court case and more.

Edited excerpts:

Where do things stand as of now with you and how big a blow is this really turning out to be?Since the case is sub judice I do not want to specifically go into some of these details but I want to talk more about the impact and having faced it firsthand. Customers are cancelling your orders, when corporates who placed thousands of units with you are saying hey! your product is sold at this price, when you are cheating us and then customers are returning your product. It was a terrible nightmare we had to go through.

Look at the kind of pictures you are getting on twitter.Yes, on twitter there are people who have posted that they have got newspapers, empty boxes, broken seal, products being reused. We have currently offered that any person who complains we will give them a free replacement. It is a health product, we want people to be healthy not stressed because of a purchase. So for us, it is about protecting my brand interest, my brand image, we are a health product. So, it has been a nightmare.

How does it work when GOQii decides to sell on the platform Flipkart? What do you negotiate in your deal when it comes to prices?In general, we have contracts with Flipkart, we have contracts with Cloudtail who sells to Amazon, Croma etc. We have a wholesale price. In a way we give them our services and then they typically have their own margins and that is when they sell the products. Specifically when there are sales like Diwali or Christmas or Big Billion Day, on those days we would work with them to offer slightly more discounts to support and we do marketing activities.

This is opening up a hornet’s net because if they are going to go this route, this is going to cause a lot of chaos for several brands. So, what is the deeper significance of this as well in terms of policy, in terms of being able to regulate what is happening online?The most important part here is the interest of consumers. While in one way, they are benefiting with the discount, on the other hand, we have seen what is going on because if brands like us are going to suffer, it may even take us out of business very frankly. 

The reason we have to do this is because we had no option. As a start-up, we do not have the resources to fight these billion trillion dollar companies. We are here to do business, to make people healthy but we were forced into this. I am glad that the court at least gave us some relief. We are assessing the situation and my hope is the government should look at this very seriously because this can have an impact to small sellers, SMEs. It can also have an impact on the larger ecosystem especially when India is going to be the biggest market for ecommerce, online taxi services, food delivery.

Having faced this yourself, what would you want the government to do in terms of a policy change? What would be idea that can really protect founders and businesses like yours?Clearly, business needs to work on the principle of demand supply. Right now the pricing and all that typically works on that. If I buy at x price, I will not sell it at a huge loss. Maybe if it is not selling, I will take 10% loss, 20% loss. Right now, that logic is somehow not working in this marketplace.

How many of your sales actually come from online platforms like Flipkart or others?We have three channels; online of course, we sell, we then have a huge offline partnership and then we have enterprises. Insurance companies work with us, banks work with us, corporates get their employees on our platforms. So, we have several channels. Online is about 20-30% of our sales but the problem is not this 30%. The problem is that discounting here has impacted my 100% because everybody else is coming on our backs and besides that the customer backlash online where they are saying they are being scammed, the products are fake. It is a storm and we are going to hopefully sail through this I hope.

What is the timeframe that you are looking at to resolve this? Are there going to be restrictions on how you are functioning in terms of your sales, your other streams?The order just came in last week. The next hearing is this week. With court matters, this could take a little longer. We are prepared for that and like I said, for a start-up we are putting a lot of our resources now. I do not want to do this but we are forced.

It is quite a significant discount that they have given and on top of that like you said it is a damage to the brand. Is it not also damaging Flipkart if they are going to be selling empty boxes?Flipkart should possibly answer this. At least what I can say is that any person who has bought from Flipkart during this sale and who have suffered, we are giving them a free replacement, no questions asked. I do not want at least the GOQii’s brand to suffer.

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