With deep online discounting making a comeback this festive season after two years, companies are once again taking steps to halt the sale of their products at predatory prices in an effort to curb dilution of their brand equity, prevent cannibalisation of offline sales and thwart efforts to push fake products. Some are entering into or strengthening direct selling arrangements with online marketplaces.
Sony, Apple, LG and Eureka Forbes are intensifying these measures after Flipkart and Amazon offered heavy discounts and cashback deals during their festive sales from Navratri in October to Diwali earlier this month, industry executives said. Such measures by companies return after two years, they said. Eureka Forbes has taken legal action against 200 vendors for selling its products at deep discounts on ecommerce websites, warning them against making such unauthorised offers because the company has designated online sellers.
Sony India sales head Satish Padmanabhan said the company has a direct relationship with Amazon and Flipkart across key product categories. “It has facilitated us in maintaining channel parity and foster good growth,” he said. LG has extended a sales partnership with both marketplaces to include refrigerators and washing machines to TVs and smartphones.
The UK’s Dyson has said it will honour its India warranty only when products are purchased from official authorised sellers.
Earlier this month, Apple entered into a direct business agreement with Amazon to allow only its authorised sellers to transact on its website. Industry executives said this step will reduce the quantum of online discounting on Apple products in India and prevent fakes being sold.
Eureka Forbes chief transformation officer Shashank Sinha said it has brought down the over 1,100 unauthorised online sellers found at the beginning of the year through concerted action.
“The unauthorised sellers on the marketplaces pose a huge threat to consumers. Lured by lower prices, consumers may end up buying fakes or assembled products,” he said.
A senior executive with one company that has taken action against predatory pricing said some sellers sourced products locally from offline stores and sold them online at rates lower than the market price.
“There is renewed interest from the brands to forge close partnerships with ecommerce marketplaces to bill directly to them so that their entire product portfolio is covered,” said a senior executive with a leading company.
Small appliance maker Usha International president (marketing) Sandeep Tiwari said the challenge is to control unauthorised sellers selling on the online marketplaces.
“Products are made on consumer insight and years of research, whereas what they highlight is mere price,” he said.
Companies had initially forged direct business relationships with ecommerce entities including Amazon, Flipkart and Paytm Mall to ensure they promoted sales from authorised sellers and predatory discounts are avoided on select products.
These ties are now being deepened to cover their entire product portfolio and weed out unauthorised sellers.
This is as per a report in the Economic Times.