Moneycontrol
Oct 18, 2016 12:24 PM IST | Source: Moneycontrol.com

Big brands are not happy with e-tailers' huge discounting

A report in the Economic Times says that brands like Videocon, LG and Godrej aren‘t happy with the big discounts on their products on Flipkart, Amazon and Snapdeal during the festive season sales.

Moneycontrol Bureau

The on-going e-commerce sales have been offering electronics at big discounts to attract more and more customers. But, the big brands are not too happy with discounts offered on their products.

A report in the Economic Times says that brands like Videocon, LG and Godrej aren’t happy with the big discounts on their products on Flipkart, Amazon and Snapdeal during the festive season sales.

The report says that the white good brands have cautioned that this is a violation to e-commerce regulations and warranty on these may products may not be applicable.

The e-commerce players are giving out huge discounts in their festive sales to attract more customers and are likely to continue with the trend. 

Industry sources have said that Videocon and LG besides cautioning the e-tailors about discounts have also stopped deliveries to some sellers. Brands feel such huge discounts not only pull prices below cost, but also tarnish the image of the company, which could hurt its retail sales in physical shops.

The products are been sold at 10-15 percent lower than the cost price at which they offer products to distributors and sellers. The company's 90 percent revenues comes from its brick and mortar model.

LG issued a notice to its partners on October 5 cautioning that products at such low costs could be duplicates. Similarly, Videocon, too, informed its traders that online prices must be on par with offline ones and are informing customers that warranty may not be applicable on heavily discounted goods.

The companies are hopeful that the government will step in if any violation of regulation happens.

However, the e-commerce majors – Amazon, Flipkart and Snapdeal – have denied violating regulations. They maintain that prices are determined by sellers or brands and they just provide a platform.
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