New Delhi, Dec 10: In an attempt to restrict the onslaught of heavy discounting by online retailers, several IT and non IT companies are taking steps to prevent them from cannibalising their traditional IT channel and distributor business.
Market sources confirmed to Channel Times that imaging companies like Nikon and Canon have issued an advisory on its website against buying the company’s products from two leading e-commerce firms — Flipkart and Snapdeal.
Similarly, Canon has taken note of competition from online players and come out with guidelines on selling its products online.
Industry sources also told Channel Times that Lenovo has also issued an advisory to these online companies.
Not only IT companies, even electronics and lifestyle brands which have been witnessing sluggish sales due to macro-economic conditions are also suffering due to the huge discounts offered by e-commerce players.
Alok Bhardwaj, Executive Vice-president, Canon India, was recently quoted in the media as saying that only those authorized by Canon can sell their products. In other cases, the company does not take responsibility for damage.
Several other players also said that they have a policy to prevent price under-cutting by e-commerce players. In many cases companies are also refusing to offer warranty on products bought online if they are not authorized.
Industry sources revealed that Nikon India had written to its distributors strictly warning them against selling products to online players. Any failure to comply with this clause would result in the distributor being debarred for three months, the media report said.
Even several IT associations are getting together to fight online pricing, which is directly eroding their bottomlines and profitability.
Many e-commerce players are also getting into the volume game, industry players said. Backed by funding from venture capitalists and private equity players, they are trying to establish customer traffic. E-commerce firms largely work on the warehousing model and the sourcing model.
Search giant Google estimates more than 200 million Internet users across India and claims that more and more users are keen to shop online, fueling the growth of both multinational and homegrown brands in this space. Industry estimates suggests that there are close to 20 million online shoppers in India and its estimated to grow to 50 million in next few years making it a 16 billion dollar industry.
Also Read: http://www.channeltimes.com/story/google-starts-online-shopping-festival/
http://www.channeltimes.com/story/punjab-partners-initiates-movement-against-unfair-online-trade-policies/