Saturday 18 January 2020

Amazon, Flipkart bring Diwali spirit to Republic Day sales

Amazon, Flipkart bring Diwali spirit to Republic Day salesKOLKATA: Amazon and Walmart-owned Flipkart have assured brands that there will be no change in the pricing and discount strategy on their ecommerce marketplaces and it will be business as usual during the sales that started on Sunday, said people with knowledge of the matter.

Discounts during the ongoing Republic Day and Great Indian sales on Flipkart and Amazon, respectively, will be similar to that last year, said five senior executives of leading online-focussed brands. In some categories such as televisions and discounts, they could be as steep as Diwali discounts, they added. Brick-and-mortar traders said they will approach the government afresh with complaints about deep discounting by the marketplaces.

Commerce and industry minister Piyush Goyal had reiterated last week that ecommerce marketplaces are welcome to invest in India but have to comply with the laws, which aim to ensure that small retailers are not hurt by unfair cashrich ecommerce companies. The Competition Commission of India (CCI) has also initiated an inquiry against the online marketplaces over discounting and preferential treatment of vendors. Small traders accuse the marketplaces of breaking overseas investment rules and engaging in predatory pricing.

“Discounts are happening just as planned,” said the chief of a leading shoe and sportswear brand. “The product and pricing strategy is planned a quarter in advance and alpha sellers and marketplaces have indicated nothing changes for this quarter.”

Amazon and Flipkart didn’t respond to queries. They have always maintained that they follow the local rules.

Amazon, Flipkart bring Diwali spirit to Republic Day sales
The executives of the brands said the marketplaces made it amply clear in this regard that any discounts will have to be borne by the brand or the seller. Also, marketplaces and large sellers have said even if a product is sold at its lowest price, there should be at least 10%-plus margin for all three combined — brand, seller and marketplace.

Both Amazon and Flipkart are working on a margin-based strategy where brands offer the discount, while the marketplace supports them on visibility and a stronger digital presence, said Avneet Singh Marwah, CEO of Super Plastronics, which sells Kodak and Thomson televisions online.

Brands said the margin they had offered to sellers in 2019 has gone up by 7-10% from 2018, indicating the average discount in 2019 has been lower after stricter ecommerce rules came into effect in February, requiring marketplaces and some top sellers to change their business structures.

Except for a few sale seasons such as Navratri, Diwali, Republic Day and Independence Day, the average online discount dropped last year after the government issued the ecommerce norms.

Brands and sellers are trying to keep prices attractive for customers and ensuring business is profitable for everyone, said Manmohan Ganesh, chief operating officer at online exclusive brand BPL.

However, offline retail lobbies such as the Confederation of All India Traders (CAIT) and All India Mobile Retailers Association (AIMRA) reiterated their stand against the ecommerce marketplaces.

There is a 5-15% discount on smartphones in the current sales on Amazon and Flipkart, including bank instant discounts or cashback, said AIMRA president Arvinder Khurana.

“Even brands have continued to offer special pricing and exclusive models to the marketplaces. We will approach the CCI to prove that money is burnt in online,” he said.

CAIT secretary general Praveen Khandelwal said the association had met Goyal on Saturday and apprised him of the factual position.

The head of a leading smartphone brand there is no law that prohibits brands, online sellers or offline retailers from offering discounts.

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