Why GOQii is outraged over Flipkart selling its products at half price

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The spat between smart wearables maker GOQii and Walmart-owned Flipkart has taken a fresh twist with Mumbai City Civil Court asking Flipkart's sellers - Retailnet and Tech-Connect - to stop selling GOQii products. GOQii had sent a legal notice to Flipkart, claiming it had to suffer huge losses due to deep discounts offered on the e-commerce platform.

In an interaction with Moneycontrol, Vishal Gondal, founder, GOQii, talks about the spat with Flipkart even as he declined to go into the details since the matter is sub-judice.

Q. When did you notice that Flipkart was offering deep discounting on GOQii devices? What is your main point of concern?

A. When we work with marketplaces and if there is any discounting done, it is done with our approval. We even contribute marketing dollars to a lot of these things when there is Diwali or some kind of a sale. So that is a standard practice.

What happened in this case is not discounting. Instead our product – GOQii Vital – which is worth Rs 1,999 was suddenly being sold at 65-70% discount for Rs 999. This was even cheaper than our manufacturing price. And because of this, we have lost business. Online business for GOQii is just 30%. 70% of our business is coming through offline. We have insurance companies, banks etc. All these clients buy from us in bulk. Then we have distribution partners.

Today, everybody goes to Flipkart and Amazon to compare prices. Most customers check the prices online before purchasing offline. Now whoever will find the price on Flipkart at Rs 999 will think he is being fooled offline.

Due to the huge disparity in prices, we had issues. Our partners and customers started feeling cheated. We tried our level best to try and convince Flipkart to take the offers down. That is when we approached the court and got an injunction on these sales.

Unfortunately, we are now seeing consumers posting on social media sites photos of damaged seals, products being sent with empty boxes, etc. We have announced that any customer suffering after buying from Flipkart will get a replacement.

It is a nightmare for a startup. On one hand, I am having my existing customers and partners and distributors cancelling orders and on the other, my brand is getting damaged.

Q. Do you have any numbers in terms of people coming forward and complaining about fake products?

A. GOQii has received many complaints. They are on Twitter but a lot of complaints may have gone to Flipkart directly. We don't know the extent of this because we don't have the visibility. I can only tell you what has been posted on Facebook and Twitter.

Q. While All India Online Vendors Association (AIOVA) has been crying foul over the business model and structure of online marketplaces in India, this is the first time a prominent brand has taken a step forward, claiming that marketplaces are funding discounts.

A. Very frankly, we did not want to do this. We were caught in a situation where our business was under threat and we had no other option left. We don't have resources to fight a multi-billion dollar company.

 Q. So, overall the discounts have been in the range of 65-70%.

A. More in certain cases. After the court's order, it has stopped.

 Q. Before this incident, who was funding discounts for your products sold on Flipkart?

A. Merchants clearly don't have millions of dollars to fund it (discount) from their pockets and neither do startups like us. So, the discounts were given by players with deep pockets. Giving discounts is not wrong but this is predatory pricing.

Q. But as a brand, do you have the right to direct retailers or control their pricing?

A. We don't control the pricing but when such discounts are given, we have an issue. India is going to be a big market for e-commerce. Government should make sure that the consumer's interest is protected. While large companies have billions of dollars, small and medium enterprises don't have resources to fight.

Q. At this point, what are your expectations?
A. Later this week, Flipkart is expected to file its reply. We need to start accessing our damages and hopefully figure out a way to claim that.