Offline mobile phone retailers write to govt to curb predatory online pricing

The All India Mobile Retailers Association (AIMRA) claims that predatory online pricing and exclusivity deals have damaged the ecosystem of the trade beyond repair.

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The online versus offline fight in retailing of mobile phones has surfaced again with the offline retail trade body writing to the government of India to put an end to the practices being followed by e-commerce companies, reports Economic Times. However, the All India Mobile Retailers Association (AIMRA) has not named any specific e-tailer in its letter.

The festival season has begun in India and will last around a month at least till Diwali. There is an estimate that the ecommerce platforms could end up selling products on their sites to the tune of close $5 billion and Flipkart’s Big Billion Days and the Great Indian Festival on Amazon could account for over 80% of this figure. The sale of mobile phones leads the pack with 56% of the value of items sold online.

It is doubtful, however, if the government can or will make an intervention in this matter. At the centre of this issue is the exclusive deals that the mobile phone manufacturers themselves strike with the ecommerce platforms and offer a bulk discount. If such deals are being made outside the country how much of hold the Indian government may be able to exercise will be a question. The way these companies operate is they release the new phone models online and after a gap give it to the offline retailers. The offline retail body is complaining that in a highly volatile market, by the time the products reach their shelves there may be other models launched and they will be stuck with slow moving inventory.

They have therefore pointed out that they are looking for a ‘same product, same time same price’ kind of a situation. This means the mobile companies must release a mobile phone at the same time on all channels at the same price.

The letter written by the AIMRA has been addressed to the commerce ministry, the Competition Commission of India and the Department for Promotion of Industry & Internal Trade (DPIIT). The CCI had been involved in a similar dispute earlier but to conclusive action was taken.

The DPIIT saw it fit to issue some fresh guidelines in December last giving time till February this year for the ecommerce platforms with FDI to desist from practices that were not permitted under the norms under which they were allowed to invest in the online retail business. Flipkart (now owned by Walmart) and Amazon appear to have by and large complied.

Interestingly, the AIMRA has pointed out that there were retailers (they claim unregistered) who purchased from the online platforms at lower prices and then selling them offline. They claim the ecommerce companies were aware of this but have turned a blind eye.