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1. 

   Prateek Bohra October 16, 2013, 1:10 pm

   Dear Mr. Hari, 

   Its a nice endeavour at your end to write the article and to write to CCI. I support you towards asking CCI to have a fair practice to the extent that products are not sold below their MRP’s or a minimum guaranteed margin. But, think about this.. you have a dead stock of S***ung Laptops and a Purchase Manager from XYZ University comes to you and offers to buy all the old model laptops but at a steep discount. Won’t you be willing to sell him at even say nominal loss and generate some cash rather than holding old and dead inventory and block your entire investment. E Commerce companies are doing the same, to build brandvalue they are offering hefty discounts, no doubt are killing physical retailers market share with their substandard products and tarnishing brand images.

   I support you for what you have  done !!

2. 

   Hari Rastogi October 16, 2013, 1:44 pm

   Dear Prateek,

   All the e-commerce companies are making huge losses. There are some e-commerce companies with 7-8 years of existence and they have Rs.50 crores/month of losses. It’s not that they only have DEAL STOCK with them but it’s like they have plan to sell at very discounted price from their costing to kill competition and capture the market.

   No one in the world can compete with a competitor who is selling is losses and having loss making business model.

   Think for poor small physical retailers can they run their shop in losses for 7-10 years. So this is very unfair competition. For 2-3 online retailers loaded with heavy FOREIGN VC funding it’s a gambling of capturing entire market where as for 50 lakh plus physical retailers it’s matter of ROJI ROTI.

   And when VC funding is not allowed by Govt to e-commerce in India these companies are registering offices in Singapore etc and routing the money and there is a news every week for $XX million funding to XYZ e-tailers. So CCI must take action. 

3. 

   Rajesh Babu October 17, 2013, 3:16 am

   Guess it is time for legislation requiring minimum retail price and maximum retail price to be published on packages of all products. There is already one major manufacturer who has acted against such unethical price under cutting –https://www.thehindu.com/business/Industry/flipkart-snapdeal-out-of-nikon-focus/article5143190.ece

   if most retailers can’t sell a product for even the minimum retail price then they should appeal to the manufacturer to make the necessary corrections in a transparent manner and the same should be published and printed on the package covers.

   But at the same time several offline retailers who raise a hue and cry now are guilty of a number of unethical practices for centuries. A huge percentage of offline vendors still think MRP stands for Minimum Retail Price.

4. 

   Praveen October 17, 2013, 9:20 am

   Possible long-term solution could be getting together as an existing or new association and negotiate with the manufacturers – either retailers provide exclusivity to B&M sellers and reduce overlap hence undercutting of margins, or risk to lose their business – which would be difficult because as a whole physical retailers offer more market than e-sellers. 

5. 

   Amit Misra October 17, 2013, 9:41 am

   I have run through the complete article and comments and here is my view to Mr. Rastogi “Ultimately, we are all bound to MRP where M stands for Maximum…and its really unfortunate to learn that its not Minimum too. Though, we can sit and debate whole day on Fair Business Practice but eventually its all about Sales. If a company decides to take losses its their model…they are boxing those lost dollars caped with a tag “Customer Acquisition Cost”. And during the exit or funding or sales they show bank upon Repeat Business from these acquired customers. Therefore, the eCommerce business is evolving around RETURNING CUSTOMER not EOD SALE.”

   Coming to your initiative, “Defintely, there must be regulations as proposed by you but I see nothing as immediate resolution that could help small scale Retailers (offline/Online). Gone are the days when a person could succeed by doing a vanilla flavor trading/business…Now you must do value addition ot your offerings to make position it in market. And, this is the best way to challenge these ‘cash-rich startups’.

6. 

   Ankur Khangaonkar October 17, 2013, 10:03 am

   I understand the frustration you might be facing given how the online retailers are running their cut-throat pricing strategy to acquire customers.

   But I personally do not agree with your viewpoint that the government should step in and take action against their pricing.

   This is a free market. If someone wants to burn money, they fully have the right to do so. There is no reason they should not be allowed to sell at a loss to gain customers.

   By this yardstick you as a distributor get a better deal than a small retailer because of you being Richer than them and more connected. You may be able to get a good price because you buy 500 laptops, while they can stock only 5.

   Does that mean they should sue you?

   And if their money is illegal, they should undoubtedly be tried for that. But not because they sell at a lower price than physical retailers.

   No one is entitled to business or customers. Everyone must win them through whatever value they provide. That my be in terms of a lower price or a great customer service and a nice conversation at the sales counter.

   Offline retailers must be able to differentiate their value, not only through pricing. It may be through support and better service. I know a lot of people would pay more if they knew they could approach a shop and a helpful person in case their laptop has problems.

   Though I do not have similar thoughts on this issue, I hope your business grows and prospers!

   All the best!

   P.S. Funnily enough here in Pune, the local mobile phone retailers sell at about 500 Rs cheaper than any other ecommerce player. Dont know the situation about laptops though.

7. 

   Devesh Ram October 17, 2013, 10:07 am

   Hari, Its nice you have written and raised the voice. But i think you have missed to put your recommendation in your letter to justify your complaint.

8. 

   Sagar Yadav October 17, 2013, 11:20 am

   Well Hari,

   I am tired of this traditional mindset that customer should be in someone’s pocket and if customer is offered choices then they should form an association and only those should be allowed to trade who are part of the committee or who follow the rules of the association.

   I am facing such problems of laid-back businessmen threatening with associations when they see me take their business.

   Money is a fluid asset – it changes hands. If VCs put their money and under-cut the prices – it cannot go forever – and by your logic they should have closed shops in 7 to 10 years.

   This online-offline retailer battle is a false battle. The PPP had place as a factor. Now everyone can have a place in a laptop or mobile by going online. Nothing stops you from going online and competing. 

   A few big players cannot capture market of each and every product – let them do the loss making products and you do the business in products where they also make profit or products where they do not do business.

   Offer value to consumers and if your overall value proposition is good – customer will buy from you. Think about Suzzane Khan’s The Home Label doing profitable business despite having competitors offering multiple products over under-cut prices. She has maintained a quality that consumers can trust and consumers pay for that.

   Rather than Flipkart, Snapdeal etc being unfair – you are the one being unfair here. Just by being in large numbers does not mean you have the right to restrict new players.

   You letter comes in bad taste to me and I see in you those hordes of vegetable vendors who failed to innovate and offer good value propositions to customers and now form associations and try to block online vending.

   Answer my one simple question – why should I buy laptops from you – what is your value proposition ? Awe me with the answer and you will earn a customer. Price is just a single factor among multitudes of factors.

9. 

   asha chaudhry October 17, 2013, 1:28 pm

   hari,

   alok shared your post across social media. 

   this is the fb link – you may want to respond to some of the comments there as well as on twitter – 

   https://www.facebook.com/rodinhood/posts/10153460048090495

10. 

    Mayank Batra October 17, 2013, 1:52 pm

    Isnt he trying to make a fair point. He isnt contesting online vs offline business models.. And he is not crying about them being more efficient, he is just making a point thats its anti competitive for a couple of players kill the whole market, using money. Didnt Microsoft lose a similar case against Netscape and was charged with killing the browser market. 

    Nothing to do with Business models or innovation really

11. 

    Kunal Arora October 17, 2013, 2:26 pm

    How the ecommerce companies are wrong ?

    I dont get they provide discounts but no one sees the payment gateway costs as well as shipping costs they have to bear. Moreover these 50 lakh plus retailers also offers discounts on occasions. Moreover getting xx million dollars in funding is not a easy thing. you have to be calculative and accurate for that. These online retailers have made there businesses successful by there efforts not by killing physical retailers.

12. 

    Sharad Mishra October 17, 2013, 3:14 pm

    Thanks Mayank. Very true.

    http://www.wewillact.com

13. 

    Ashish Baharani October 18, 2013, 7:56 am

    I’m totally with you Hari !! Let me tell something about myself ,I am a apparel retailer with a good client base of youth visiting our store…Dese days when they visit they talk about they ordered x product at this discount or see the product and go again to check online…

    Dese online people are just playing with VC money and they are thinking that turnover is the key…

    I dont want to disclose the name of the online player ,but there is a biggie who sell to retailers as well through online portal by mailing them discount codes to give them additional margin from the discount offered so that the VC’s can see the monthly sales and the units sold..

14. 

    Praveen October 18, 2013, 8:46 am

    I have a doubt/question, so throwing it out there. 

    Is it possible/okay for a Brick to Mortar retailer to purchase from a e-commerce portal at ridiculous discounts and then re-sell at their store? I understand the issue related to warranty etc for large goods such as consumer durable but there are other business lines where retailers often buy on a “kaccha” bill and no warranty liability – fasion, clothes, cosmetics etc. 

    PS: this may be illegal/unethical so i am keen on opinions, as i don’t know. As a background, i am contemplating a conventional retail set up and this is a business strategy question. So specifically, 

    1. Is it legal? Do e-commerce sites have clauses/binding that the goods have to be sold to end-user only. 

    2. what are taxation related issues? 

    3. other potential problems. 

15. 

    Jigar Shah October 18, 2013, 4:06 pm

    Hi Amit, Agree with you. Its no longer simple trading with margin. One needs to innovate…Its same case where “Sabji” waala protested against retailers like reliance / big bazaar for selling “Sabji” cheaper…Traders protested on FDI in retail. Traders / sabji walla have very poor supply chain. They just look at margins. Onion / Potato whose price from farmer is hardly 2/3 Rs kg in Nashik, becomes 20-30 by the time it reaches mumbai. All those trader in market, they stock up and speculate. There is cos to store and forward…but instead of optimizing that..people tend to be just speculative….I know there are “Kela Waala” “Seth”…who dictate what will be minimum price for “kela” throughout complete area…

    Mumbai crawford market, and businesses nearby…high margins, making sure everyone doing price fixing etc…tht has been here for long….Even offline retailers sell at cheaper price like online ones when inventory is wrong / exceeds mark…

    I do agree about minimum, but who will decide that ? Nikon ? What if I have 10 lenses of say some odd combo…I thought i will sale…but i could not …so will Nikon take it back at minimum ? They cant.

    its free market economy….There are brands, who do impose minimum price for luxury goods….those are like for top 2% market where quantity does not matter….its just brands….Like perfumes…(Now even they are changing)…

    I agree…margins are thin….then may be we need to innovate on services…how about someone buys laptop from your store gets free pickup if issue…or may be laptop buyers gets extended warranty from you (assuming you tie up with repairer or you are the one…)…This might reduce margins..but say you have a customer for 3 years….MAy be free tutorial for a week on hot to use one…My dad will prefer even if I tell him online is cheaper…You surely can get good discount from a tutor with assured 10 students….Just some quick thoughts…

    Trust me …there   is a market for these…services matters. there are 10 cheaper brand of nice cell phone with same spec…but eventually their services and reliability wins…

    Flipkart is not cheap…there are cheaper then those in market…but service compared to others is quite assured…And we do pay for that…sometimes higher..

16. 

    Sagar Yadav October 19, 2013, 4:20 am

    @Mayank Can you show me similarities between the case Hari is highlighting and the Microsoft vs Netscape case?

17. 

    Sagar Yadav October 19, 2013, 4:45 am

    Offline retailers have over-priced the goods for centuries and were acting as basically stockists without offering additional services.

    Now they have been caught on the wrong foot by the online model.

    Now something about online competition – FlipKart.com etc. doesn’t break my sweat (I am banking high on online models for my own business), one website cannot capture the whole market as of now. Moreover – some websites can always be local players – offering better services owing to better knowledge of local area.

    Your http://www.wewillact.com seems like GundaGardi to me, unfortunately this happens a lot in our country’s democratic system. Think about the Hindu dominant legal system in most states of India or the caste based reservation system. They make no sense but all because of popular support (like what you are trying to gether by wewillact.com)

    It is just unfortunate that we have non-competitive people complaining every time and being unfair to innovative entrepreneurship. If you want to set-up a minimum price guarantee – collaborate with others like you and do it – what’s the need of a law there. The need of the law is – to ensure Gunda-Gardi under cover of such laws. By enacting laws you ensure that the society operates how you want it and hence restrict the free spirit of expression and innovation in entrepreneurship and beyond it.

18. 

    Hari Rastogi October 19, 2013, 8:28 am

    Dear Sagar,

    I am running both online retail and offline retail. I have already cleared that no one should be against any retail format or any company. I have been working for betterment of our society from long time. I started my career by joining the Infodev(world Bank) project which was for upliftment of lower strata of the society. Through WWA ( We Will Act) we are just raising the issue of injustice happening with small physical retailers as some (2-3 and not all) online retailers are selling much below the cost price to lure the customers. By increasing the discounts they are killing small stores (online and offline both) who don’t have even a box of cash.  

    Please check and correct your comments. You have used the words-

    >GundaGardi- It’s just a forum. We are just creating awareness and pulling attention so that justice will be done . WWA (We will Act) is not an organisation but just a website and bunch of people raising their voice, filing RTI and going to file cases under the law of land.

    >Hindu -Religion is not related with this topic at all. The small retailers are of all communities. 

    >Non competitive people complaining all time- check my profile. I am running my 4th company, have given interviews in cnbc tv etc with even FLIPKART founders,have met VCs, making good money, donating some money and time to NGOs working for orphan children and have been working for social issues. I can’t keep mum when I see something wrong is happening. The poor small physical retailers can’t raise their voice, they will just close their shops and join labor jobs somewhere. 

19. 

    Abhishek October 19, 2013, 5:51 pm

    Hi Hari,

    Although I do understand your sentiments but I do not agree with some of your viewpoints.
    Their is a difference between offering heavy discounts and selling below cost price, the online retailers are doing the former. Also even online retailers are either shutting shops or getting acquired so it’s not smooth sailing for them either.

    The losses that these online retailers are making is coz of high overheads that they have created in anticipation of higher revenues and also some of them have their own logistics and warehouse which is eating into their profits.

    Just consider these points:

    1. If due to better sourcing or innovative marketing if these online retailers are passing on better discounts to consumers then it’s not unethical. You need to innovate and find your niche. Also what about offline retailers like Croma, Reliance Digital etc who are offering better discounts as well than local retailers,certainly they are not unethical.

    2. Offline retailers have some advantages over online retailers such as proximity to local buyers,instant delivery options, local service offerings and hence price is always not the key factor.

    3. Also the market is way bigger , which these 2-3 online players would certainly be not able to cater to.

    4. One reason why consumers are opting for online retailers is coz they are fed up with the sloppy service and high handed ness that they have to face at some of the local stores coupled with lack of knowledge of the sales people at some of these stores.

    My suggestion to you is to innovate and think out of the box because it’s a free economy and complaining about it and creating associations is frankly a regressive step.

    Regards,
    Abhishek Sinha

20. 

    Mayank Batra October 19, 2013, 6:27 pm

    If the costs and losses were only due to infrastructure there was no case.

    But burning money at a higher rate to kill competition is a similar case of trying to become a monopoly.

    The reason why their is a lot of cash being burnt is to stay on top. The only time the cash burning stops is when the competition dies because it cannot burn cash at the same rate. Thus you are the only survival and start having a monopoly. 

    I did not say that he should win or lose the case, i would not even have the exact metrics in my hand to prove anything. I am just saying he has the complete right to go to the authorities and then let the law decide. Everyone else was trying to make a case of him being unfair and trying to curb innovation, which is not the case. He is not against Internet technologies or eCommerce per say. He is against unfair means, if any adopted by such companies. While the people have missed the point and are trying to make it a case of curbing innovation.

    Also if i can point out, similar things have happened in the past, take Coca Cola for eg. which ran at losses for around 15 years bought the big brands and did not let the retailers keep the small brands. And most of the small Indian brands are dead.

    Im not say right or wrong, but everyone should have a chance to present a case.

    Cheers

    PS: I don’t believe Indian laws are stringent enough for there people to maybe win or even if CCI has any teeth

21. 

    Ravi Kant October 22, 2013, 8:17 am

    Dear Hari,

    What do you say about a physical retailer who sells below the price you are selling or for that matter compared to any other physical retailer?

    Your article suggests that anyone (even physical retailer) who is selling below your price should be sued. Now even with the same price some physical retailers sell more compared to others. They do so purely because of better service, faith, behavior etc. 

    Consumer will always buy from the place where they get lower price and better service. 

    BTW just FYI on MRP, govt has started video, print adverts stating that the MRP is the maximum price that can be charged for a product. And the consumer is free to negotiate/bargain on MRP to get a lower price. 

    Cheers!

22. 

    Hari Rastogi October 23, 2013, 6:46 am

    The point here is physical retailers, online retailers or any retailers DO BUSINESS for profit. Most of the small retailers are existing on daily earning.

    The SOME big online retailers are playing GAMBLING, running business in losses since inception and thinking to weed out competitors and most of the small retailers and then planning to make profit. 

    Read the article in Livemint- “Flipkart boosts war chest”

    https://www.livemint.com/Companies/pbOfYVBQigpqm1D2FguQDO/Flipkart-r…

    Another article by Mahesh Murthy Sir- “I don’t hate Flipkart, I just don’t think it’s the right way to build a business: Mahesh Murthy” 

    https://techcircle.vccircle.com/2013/10/22/i-dont-hate-flipkart-i-ju…   

    Should we not protect the right to survive for small retailers against these GAMBLERS?

    Hari Rastogi (http://www.wewillact.com) 

23. 

    Jitendra Gursingh October 30, 2013, 5:09 am

    There is absolutely no problem in buying from an online store and reselling in your store for a higher price. However, just ensure & pray your end customer does not find the source you are buying from as it is likely to be available for him also 🙂 it will be your last deal that day 🙂

24. 

    Jitendra Gursingh October 30, 2013, 5:19 am

    This is an extremely valid point bought up in the right forum. However, as most have replied, if price is the only thing you have to differentiate your business then you might as well shut shop. I have a small-area multi brand consumer durables store in Mumbai (Chembur). However, with so many brands & products it became difficult to survive against the likes of Vijay Sales, ezone etc who have wider varieties & in most cases better pricing. In addition to that, the online stores issue where there is ZERO constraint on products displayed.

    A solution (to some extent) we found was to FOCUS. we converted from multi brand to a single brand (LG) and displayed a wide range of products. Fortunately LG supported us for online pricing issues & declared that there would be no warranty on those products bought online. LG also has implemented a minimum operating price (MOP) which is implemented fairly throughout all retailers.

    Apart from the above, we have established good relations with our customers in the local neighbourhood to an extent that many a time, they just place their orders on phone, without visiting us or asking the price.

    I guess competition for you maybe fierce, but remember none of the bigger players will be able to generate the kind of loyalty, service and support a smaller firm can. Use this as your strength and forget about pricing.

25. 

    kinjal October 30, 2013, 8:46 am

    I think this is one sided and biased .. you have not mentioned the single most important stake holder – the customer .. the millions of customer who finally buy and use the product that you sell.. who are benefited by a tremendous amount of value add over what you can or are willing to provide..price is just one out of many equally important factors.

    why should people bother with middle men like you – if you dont have any value add.. you have been manipulating the existing system for years – with the information advantage that you had over people.

    Finally its with the customer and you are crying foul ! 

    If you cannot or are not willing to change depending on the changing customer needs – its time for you to perish .. figure it out and you live .. 

    all other reasons that you give are just excuses for your inability to live in this information era .. 

26. 

    Hari Rastogi October 30, 2013, 11:08 am

    The companies according to you living in information era are very loss making currently and could not make any profit after 7-8 years… If businesses are meant for running in profit then they must be increasing their prices after their unethical price war will get over or may close down in losses like many other funded e-commerce companies  Taggle, Letsbuy…

    It is that these UNETHICAL online retailers(F***K**T, S***D**L,J***NG, Y*BH*…) needs to innovate their business model to run profitable business and quit unethical price war and LAST MAN STANDING GAME.

    Secondly check the facebook pages of some of these funded UNETHICAL online retailers and consumer complain forums and you will find they are flooded with complains. 

    Almost all current e-commerce players have changed their model to MARKETPLACE where they don’t have control on quality of the products. Just check-

    Flipkart sent the JUNK instead of Nikon D800 camera–https://www.therodinhoods.com/forum/topics/flipkart-sent-me-junk-in-the-…

    https://www.consumercomplaints.in/?search=FLIPKART

    https://www.complaintboard.in/complaints-reviews/flipkart-com-l60193…

    https://www.facebook.com/flipkart/posts/10151355517973559

    Police complaint against Flipkart-https://www.facebook.com/flipkart/posts/10151843325458559

    Snapdeal-

    https://www.complaintboard.in/complaints-reviews/flipkart-com-l60193…

    https://www.consumercomplaints.in/?search=snapdeal

    Snapdeal Facebook page https://www.facebook.com/Snapdeal/posts/10153028037790393

    So basically the customers are crying foul because of their UNETHICAL business practices. 

27. 

    kinjal October 30, 2013, 3:25 pm

    Hari, you yourself have come up with a solution – if people feel that these guys are unethical – they will start moving away – thats perfect for you – create a brand in which you are the most ethical retailer and they will flock to you .. thats a value ad you are doing .. people will pay premium to shop from you.. 

    and btw – notice how transparent the process has become – all the complaints can be viewed by everybody  – which is why they will have to keep improving their services because otherwise they will perish…. 

    last man standing is a fallacy – its not going to happen ever for many reasons .

    1> there are too many players with too much money

    2> moment someone goes down – there will be others to take there place .. 

    3> if some guy become too big – immediately a million other opportunities open up – in terms of product niche / in terms of unique value ads and many other ways .. 

    4> also have a look at the amazon picture – hardly any profit – running for years – and yet e-commerce industry keeps growing in america and elsewhere.. 

    if u cant win the price war – all the good for u – do something different .. 

28. 

    Jitendra Gursingh October 31, 2013, 3:05 am

    Dear Kinjal, 

    Agree with you wholeheartedly. However, I just hope that good sense prevails in the long There is this term in marketing called “Cost of Poor Quality” which says that buying a cheaper product can be very very expensive in the long term, to the extent that it can be fatal. 

    There are many products which do not require support or service like books, music, perfumes etc. and these are being sold in huge numbers online. However, for products which require service, like durables, mobiles phones etc. people will take time to realize the difference in the experience and it is not a pure price play.

    I would also agree that many retailers need to change themselves rather than waiting for things to change around them. For e.g. a retailer who is used only to selling products, may have to shift to selling more of support services than just products. Retailers have to re-think about the kind of in-store ambience and staff support they provide. Believe me, these are some of the first ‘moments of truth’ a customer experiences & it makes a world of difference in the shopping experience. 

    For the customer, it is not a win situation but actually a situation wherein he will have to make a wise choice on whether he would be ok buying a product at a cheaper price and staying without dedicated support or probably pay a bit more or the same price for touch-n-feel and better service.

29. 

    Ravi Kant October 31, 2013, 4:17 pm

    These complaints are not because of unethical business practice but simply happen when there are so many transactions and the scale of operations is so big.

    Can you name a single company in the world that does not have any complaint against it?

    There are people complaining about rolls roys, boeing, apple, microsoft, Infosys, TCS, Facebook etc. Go check the complaint boards. The complaints against these doesnt mean they are into unethical business practices. It simply means they are so big and their clientele is so diverse that some differences/issues are bound to happen and dont forget the human error factor as a key reason for such issues.

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