A report out of Calcutta this morning states that senior officials of three global handset makers reportedly met earlier this month to try and figure out what to do about cutthroat online pricing. While top executives confirmed that the meeting took place, no one wanted to go on the record because it could lead to allegations of price fixing.
The fact that representatives of three companies that normally battle against each other fiercely in the marketplace came together on this issue is a reflection of how badly the traditional retail channels are getting hit in India. The culprits named in the report include Flipkart, Snapdeal and Amazon India.
Apple and other tech giants are looking to fight back against what they see as pricing distortions and brand damage inflicted by the discounting marketplaces. According to the report "companies like Apple, Sony, Canon, Nokia and others are planning to clamp down on distribution to sellers in popular online marketplaces and issue customer advisories not to buy from e-commerce portals as they are not authorized trade partners."
The report further noted that the products being sold online "could even be fake-products and hence lead to problems with warranty support." While this tactic may temporarily reduce the plethora of online deals, consumer electronic and mobile phone makers acknowledged that preventing such discounted sales across all online stores may be tough, since control of distribution is a Herculean task at a time when the market itself is down and in the absence of any predatory pricing laws in the country.
The issue has hit almost every manufacturer and retailers are getting increasingly frustrated at losing sales to e-commerce portals, which are passing on the 8-10% margin that manufacturers offer the trade.
The company officials who met earlier in February discussed the discounting that, according to them, has been creating pricing and trade disequilibrium, and hurting brand image.
Lenovo, Nikon and Toshiba have already issued consumer advisories warning customers about buying products online, including popular e-commerce marketplaces such as Flipkart, Amazon and Snapdeal, since they are not authorized trade partners.
If Apple is sitting down to talk to Samsung about combating this issue in India, then you know it has to be a major problem.