India's retail trade may be having an Amazon moment. Earlier this month, senior officials of three global handset makers met to try and figure out what to do about cutthroat online pricing.
Of course, what they see as a menace is great for consumers who're flocking to e-commerce marketplaces such as Flipkart, Amazon India and Snapdeal to find the lowest price for the electronic gadget they want. But the fact that representatives of three companies, normally battling 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.
This is somewhat analogous to what happened to traditional book trade in the US once Amazon became a force to reckon with. The companies are looking to fight back against what they see as pricing distortions and brand damage inflicted by the discounting marketplaces. Companies like Sony, Apple, Canon, Nokia and Samsung 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.
Herculean task ahead
Such products could even be fake and hence lead to problems with warranty support. While this 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.
"True, there is no easy solution since monitoring a retail universe of more than two lakh sellers across online and offline to keep track of who is selling at disruptive pricing is a big task in itself. But still, a beginning needs to be made," said a senior official with a leading mobile phone maker.
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.
E-commerce also happens to be at that stage of evolution where acquiring customers is critical, which means offering the lowest price, even to the extent of making a loss, makes eminent sense for them.
Of course, what they see as a menace is great for consumers who're flocking to e-commerce marketplaces such as Flipkart, Amazon India and Snapdeal to find the lowest price for the electronic gadget they want. But the fact that representatives of three companies, normally battling 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.
This is somewhat analogous to what happened to traditional book trade in the US once Amazon became a force to reckon with. The companies are looking to fight back against what they see as pricing distortions and brand damage inflicted by the discounting marketplaces. Companies like Sony, Apple, Canon, Nokia and Samsung 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.
Herculean task ahead
Such products could even be fake and hence lead to problems with warranty support. While this 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.
"True, there is no easy solution since monitoring a retail universe of more than two lakh sellers across online and offline to keep track of who is selling at disruptive pricing is a big task in itself. But still, a beginning needs to be made," said a senior official with a leading mobile phone maker.
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.
E-commerce also happens to be at that stage of evolution where acquiring customers is critical, which means offering the lowest price, even to the extent of making a loss, makes eminent sense for them.
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