This follows companies such as Samsung, LG and Sony having successfully managed to squelch once-rampant online discounting. The idea is that offline retailers can showcase deals on large brands on sites such as Amazon, Flipkart and Snapdeal.
E-commerce companies are in advanced discussions with Croma, Reliance Digital, PlanetM Retail, Vijay Sales and others, four senior industry executives said. While online firms have assured the retailers they will fully honour pricing terms, in return they want exclusive deals on large brands.
“Discounts are not permanent. Hence they (etailers) are experimenting with various models and until now they haven’t found the right model,” said Kishore Biyani, who heads Future Group, India’s largest listed retailer.
Ecommerce firms invite physical stores to sell big brands on their sites The chief executive of a leading consumer electronics chain said such an alliance would be a marriage of convenience, since online firms will get reputed sellers with the kind of consistency in inventory that small sellers can’t match and access to deals on large brands.
For the retailer, it’s a gateway to the kind of traffic that’s otherwise difficult to generate in the real world as increasing numbers of Indians take to ecommerce or through own online stores, he said.
The online companies have in any case been scaling down discounts as they seek to improve financials. They have realised that valuations are getting impacted due to deep discounting and they need to show a sustainable business strategy to investors, said Edelweiss Securities Associate Director Abneesh Roy.
He said the electronics makers had pushed back against online discounts in order to safeguard the interests of offline retailers. “Big brands too are cautious about online discounts and have hence squeezed deals since they don’t want to upset the offline trade, which contributes 90% of their revenue,” Roy said.
“Hence, ecommerce firms are now showing interest to partner with retail chains to access best of deals”. This latest initiative comes after several leading offline retail chains, including Croma and Sangeetha Mobile, said they had to stop selling on marketplaces since they were not able to control pricing and discounting.
Consumer electronics and smartphone makers such as Samsung and Sony have mandated a strict pricing strategy across the online and offline trade and formed audit teams to check rate variations with sellers being blacklisted for violations.
LG India has issued an advisory that online purchases may not be genuine or covered by warranty unless bought from lgbrandstore.com/in or its own online website.
The companies have preserved their relationships with retail chains, offering them special deals and exclusive launches.
Tata-owned Croma is considering an online brand store for which talks are on with Flipkart, Amazon, Snapdeal and Paytm, said Chief Marketing Officer Ritesh Ghosal. He said the retailer has been off marketplaces such as Snapdeal and Amazon for a while since it was leading to customer dissatisfaction due to discounting.
An Amazon India spokesperson said chains are interested in exploring the possibility of opening their own stores on the platform. A Snapdeal spokesperson said retailers are looking to partner with them as they see the benefit of gaining access to customers spread across the country. He said every retailer would need to be listed as a seller on the platform to sell through Snapdeal. A Flipkart spokesperson said in the past two years, customers have opened up to the idea of purchasing televisions, washing machines and refrigerators online.
“Large appliances is one of the fastest-growing category. With the success of top brands like Vu, BPL, Sansui and Whirlpool, other brands are seeing great value in online partnership,” he said.
Reliance Retail and Flipkart didn’t respond to emails. Some retailers are still sceptical since they are not sure about prices being maintained. Vijay Sales Managing Director Nilesh Gupta said the online channel lacks pricing sanity and the retailer will join only when there is maturity in terms of discounting.
Mumbai-based electronics chain Kohinoor does not want to list its store online to avoid a price war, Director Vishal Mewani said.
Source: The Economic Times