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Old 01-06-13   #1
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Icon8 Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices




This happens only in India - Kishore Bi(r)yani of Loss making Future Group
Organised retailers like Future Group's eZone, Reliance Digital, The Mobile Store and Next Retail say that they are unable to compete with online sites selling electronics and want the electronics companies to arm-twist online sites to increase their prices. Such a system is already enforced upon physical retail stores.

According to a report published today in the Times of India, big India organised retailers have approached brands like Apple, Samsung, Nokia and BlackBerry, asking them to impose strict pricing policies on shopping websites such as Flipkart, Infibeam and Snapdeal and force them to increase prices which are more suitable to them.

Interestingly no small retailers have any such complaints about the online stores. It is only the big retailers who champion "Organised modern retail" in the name of consumers who are clamouring for an increase in prices. Both Future Group's eZone and Reliance Digital are in huge losses. Their hope is that forcible price increases and the elusive FDI in retail will bail out their loss making businesses.

It is factually correct that online sites have much lower overheads compared to physical retail stores. They have centralised distribution and dont have to pay exorbitant rents, taxes and have fewer manpower requirements. However they are now threatening the profits of big organised retailers. It will be interesting to see if the electronics companies buckle to this pressure.

You can read the full TOI article here : Apple, Samsung told to stop online discounting - The Times of India

------------------------------------------------------------------------------------------------------------------------
KOLKATA: Electronics retail chains such as Future Group's eZone and Reliance Digital say heavy discounting by online retailers on popular smartphones and tablets such as the iPhone 5, Galaxy S4 and iPad is hurting them, and have asked manufacturers to take measures to stop such deals.

Chains such as The Mobile Store, Reliance Digital, Future Group and Next Retail have approached brands like Apple, Samsung, Nokia and BlackBerry, asking them to impose strict pricing policies on shopping websites such as Flipkart, Infibeam and Snapdeal.

"Indiscriminate discounting by online stores affects our sales to quite an extent," says Rajan Malhotra, president at India's largest listed retailer Future Group, which runs 38 eZone stores. "If we get pushed due to such discounting, we definitely have to push back with the brands," he says, confirming that the firm has taken up the issue with manufacturers.

Tne Apple iPhone 5 16GB, for example, is available online for Rs 40,950 while at retail chains and Apple stores it is sold for Rs 45,500. The BlackBerry Z10 is selling at less than Rs 40,000 online against the retail price of Rs 42,499. Such discounts are available on products such as the iPad, Samsung Galaxy S4 and Nokia Lumia.

Brian Bade, CEO at Reliance Retail's electronic retailing format Reliance Digital, says brands have to take a tough stand against such online deals that hurt the business. "Consumers often come with the online discounted price in mind and leave the store without concluding the purchase," he says.

As per industry estimates, modern retail contributes around 12% of the Rs 37,000-crore mobile phone and tablet market in India while online retailers make up around 4-5%.

Brands versus modern trade

Brands say they follow the same pricing and trade promotional schemes for online and offline retailers while online retailers say lower operational costs allow them to offer higher discounts than offline retailers.

But modern trade is not convinced. The chief of a leading electronics store says the firm has questioned brands on their margin structure.

"With wafer-thin margins of 4-7% in mobile phones and information technology (IT) products like tablets, it is not possible for any retailer to offer the discounts which the online stores offer. Something is wrong somewhere and unless the brands take corrective action, we may have to stop stocking the latest models whose sales are usually hit the most," he says on condition of anonymity.

Apple, whose products seem to carry maximum discounts online, declined comment on the issue.

Samsung India's head of mobile phone business, Vineet Taneja, says the brand offers uniform MRP for its products, with the trade partners free to offer consumers their own pricing within the MRP.

"Market dynamics ultimately dictate pricing and discounts in the market," he says.

BlackBerry India spokesman Varghese M Thomas, too, said the brand follows uniform pricing and product service policy for its products across markets.

Online retailers say they can offer lower prices because they don't have to invest large amount of capital on prime real estate and maintain stock at all locations.

"Practically, one can serve an entire city in online retail with a single stockroom," Vishal Mehta, founder and chief executive officer of Infibeam.com, says. "The savings for online retailers come from lower inventory costs, which get passed on to end-customers in the form of great offers," he says.

Indiatimes Shopping COO SubhankerSarker says special deals are not just limited to online retailing, but even brick-and-mortar to maintain customer loyalty intact.

"The process of undercutting takes place in offline retail also, particularly by small retailers. The volumes are much higher in traditional retail currently and online players respond to these market realities only," Sarker says. "Brands should focus more on controlling their prices in traditional retail which will help online retailers to automatically follow suit. Focusing on online retailers before and blaming them for curtailment is like putting the cart before the horse in a way," he adds.

Flipkart refused comment.

Snapdeal.com vice-president (business development) Tony Navin said the website has little control on pricing since it is an online marketplace where sellers across the country sell their products at a price they choose.

KS Raman, director at India's largest electronics retail chain Next Retail, says brands need to take some steps to stop heavy online discounting as it is impossible for retailers to match online competitors working at one-fourth cost and it has become difficult to convince customers on the price.

Raman says Next Retail, along with Tata-owned Croma Retail, had suggested the manufacturers should sell separate models in online stores and modern and general trade to stop this.

"But there has been no action yet. Only the brands can control this by curbing supply to channels which sells at lower prices," he says.

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Old 01-06-13   #2
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Great food for thought, although being one of the Online fraternity, Its true that we look for the best possible deals, its a hard earned tax payers money, which is already being taken back inform of tax etc. like IT, Octroi, VAT, several other duties the latest being LBT, and still end up in pockets of the unknown (read all the scams clubbed in one) so yeah if these big boys should realize - change is the only resort and that's not impossible - Its just the matter of how they figure it out
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Old 01-06-13   #3
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

They sound like dinosaurs wailing not fair when they got hit on their head napping.
What was their excuse when they ate up small retailers?

Survival of the fittest bitches.

btw, can't they be charged with cartelization/competition/antitrust/mrtp litigation?
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Old 01-06-13   #4
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by Free Radical View Post
What was their excuse when they ate up small retailers?
Basically their pitch was/is that they will provide better prices and services to customers because of their scale, higher efficiency, better logstics and modern retail management practices. For this vital national (Mukesh Ambani's) interest the interests of small middle class retailers need to be sacrificed they said.

Originally Posted by Free Radical View Post
btw, can't they be charged with cartelization/competition/antitrust/mrtp litigation?
I think if someone approached the competition commission of India then they could take a look at this.
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Old 01-06-13   #5
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Actually small retailesr are also complaining but their mouth is so small that they can't or will not be heard by the companies !! they are just small fries ! so they are at no mercy.
What the biggies are doing is non business tactics, comes under unfair trade practices and they can be prosecuted if evidence is there.
I am sorry that in India there are such companies but this is not the first time that this is happening, India has always been a heaven for cartels and unfair traders ! and now also it is.

But the logic of forcing the companies is malafied and seeing this, amazon and or Newegg would never be fruitful in India !!
Sad but true.. but no reason that they are giving can be a valid reason.. !!!
The moneyed people control everything. EVERYTHING..
Originally Posted by vijayninel View Post
Interestingly no small retailers have any such complaints about the online stores. It is only the big retailers who champion "Organised modern retail" in the name of consumers who are clamouring for an increase in prices. Both Future Group's eZone and Reliance Digital are in huge losses. Their hope is that forcible price increases and the elusive FDI in retail will bail out their loss making businesses. It is factually correct that online sites have much lower overheads compared to physical retail stores. They have centralised distribution and dont have to pay exorbitant rents, taxes and have fewer manpower requirements. However they are now threatening the profits of big organised retailers. It will be interesting to see if the electronics companies buckle to this pressure.

Yes there are rules that can prosecute them, but who will complain ?? and follow up.
Originally Posted by Free Radical View Post
btw, can't they be charged with cartelization/competition/antitrust/mrtp litigation?
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Old 01-06-13   #6
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

why would flipkart increase prices to hamper there own sales which gets hit by many online retails. at the moment ebay is doing unfair business by offering deals for 19 , 35 etc for products which cost 4 times more online/offline
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Old 01-06-13   #7
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Seriously I'm not an online seller ...just a buyer ...and from a buyers prospective i think we'll go with where ever we get better deals in terms of quality to cost ratio. I don't know what will ultimately happen with this war ongoing between retailers and online stores but fingures crossed ..lets hope something good comes out of it. Also I have seen online stores have mass supply of almost anything...means they win on availability of products..where as we can do a little bargain with local retailers to get available goods at much cheaper rates so retailers win on pricing terms...I wish we could have mix of both.
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

^^^ online prices are low almost 90 times out of 100

P.S. purchased xolo q800 and was offered 10.5k offline while i got it for less online ... got almost 15 websites bookmarked/open them all/search/decide best offer/ compare with offline and buy
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Old 01-06-13   #9
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by kartikoli View Post
^^^ online prices are low almost 90 times out of 100
Not every where also if item is available locally i would rather prefer to physically test the product before buying and yaaah little Indian Style Bargain always gets me items at much cheaper rates...try yourself some time...you'll have fun
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by kartikoli View Post
^^^ online prices are low almost 90 times out of 100
Quite true ... I recently bought a Galaxy Tab from flipkart for 9k. The same tab was quoted at 14k to me at Samsung's Greenlands, Hyderabad showroom. That's a difference of more than the 4-7% mentioned in the TOI article.
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by sukhwinder View Post
Not every where also if item is available locally i would rather prefer to physically test the product before buying and yaaah little Indian Style Bargain always gets me items at much cheaper rates...try yourself some time...you'll have fun
very bad in bargaining but for small products like mobile etc... we will get better deals online where i am considering to buy O General AC which i will buy offline

P.S. purchased led tv online just few days back and got better price then offline
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by vijayninel View Post
That's a difference of more than the 4-7% mentioned in the TOI article.
OMG so highhhhh, that's a day light burglary....thank god you did market survey before buying.

---------- Post added at 11:53 AM ---------- Previous post was at 11:51 AM ----------

Originally Posted by kartikoli View Post
very bad in bargaining but for small products like mobile etc... we will get better deals online where i am considering to buy O General AC which i will buy offline

P.S. purchased led tv online just few days back and got better price then offline
LOL... i'm wondering what will be that AC's shipping cost xD if you buy it online.... 1 ton or higher
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

Originally Posted by vijayninel View Post
Quite true ... I recently bought a Galaxy Tab from flipkart for 9k. The same tab was quoted at 14k to me at Samsung's Greenlands, Hyderabad showroom. That's a difference of more than the 4-7% mentioned in the TOI article.
wow 'khule-aam chori'
thats huge its around 5~10% difference but thats almost double

EDIT: tab @9k is expensive better deal was available on HS18 superdeal few days back

---------- Post added at 12:03 PM ---------- Previous post was at 11:55 AM ----------

Originally Posted by sukhwinder View Post
OMG so highhhhh, that's a day light burglary....thank god you did market survey before buying.

---------- Post added at 11:53 AM ---------- Previous post was at 11:51 AM ----------



LOL... i'm wondering what will be that AC's shipping cost xD if you buy it online.... 1 ton or higher
1.5Ton as my voltas 2ton is nearing his retirement after 6yrs

there are other factors to go online as we get many reward points like if i shop on tradus then i will get Xtrac points to be used on next purchase (gifted a tshirt to my bro which cost me 8rs ) secondly we will earn payback points if we use ICICI bank card

so its not just websites are earning banks too are getting customers (specially credit card ) and liquidity as people now prefer to maintain there bank balance for purchase
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Old 01-06-13   #14
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

I say that everyone check out the website of Govt !! on this,
Competition Commission of India - Home

and this is a website which can function on complaints.
so keep this in your bookmarks.
Originally Posted by vijayninel View Post
Quite true ... I recently bought a Galaxy Tab from flipkart for 9k. The same tab was quoted at 14k to me at Samsung's Greenlands, Hyderabad showroom. That's a difference of more than the 4-7% mentioned in the TOI article.
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Re: Organised Retailers Ask Companies to Forcibly Increase Online Electronics Prices

So are the prices going to increase or not.
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