Kolkata: The offline retailers of mobile phones, are facing a crisis situation. Not only are they losing out on business due to increase in online trade by Samsung, there is dwindling of profit margins too.
To make matters worse, Samsung, the South Korean conglomerate, has now devised a scheme where in customers are encouraged to purchase phones online.
Reading the riot act, All India Mobile Retailers Association (AIMRA), a pan India umbrella body, observed a three-day silent protest against sale of Samsung phones from February 11 across India. The protest included no sale of company’s handsets and no payment to distributors against Samsung rolling out a 5% and Rs 1,500 cashback offers, depending on the phone models, when the payment is done through Amazon Pay.
Retailers said that Samsung is the only brand, which sells online exclusive smartphones, hurting their sales.
Another grouse shared by the retailers’ body is that Samsung’s employees and distributors were forcing retailers to register as sellers for Amazon Pay and threatening to stop supplies if they fail to register.
The association had written to Samsung India’s newly-appointed MD Ken Kang about their resistance to Amazon Pay promotion. It had written a letter to Kang on February 1 saying that to avail the cashback promotion with Amazon Pay, consumers will have to download the Amazon app and pay through Amazon Pay, which would eventually hurt the offline business as consumers would get hooked to e-commerce shopping.
The body felt that offline retailers, by default, will get registered as Amazon sellers to receive payment for the handsets sold, helping the e-commerce brand fatten up their retailer base.
Union railway minister, in his speech a couple of days ago at a business event, said that e-commerce companies must work within the laws of the land. The statement has come has a shot in the arm of the retailers.
Navneet Pathak, an AIMRA core member, said, “Samsung has been adopting predatory pricing tactics and extending extra benefits to online customers. They never give the product in time and do the product launches only online. When the handsets are launched offline, they neither match the price, category or configuration of the offline ones. As a result, retail trade is slowly losing its importance to customers.”
Retailers are protesting against the Korean company’s association with Amazon, which they say is following unfair trade practices. “This has affected retailers. We are close to 7cr retailers across India, of which 20% are in mobile trade. The retailer was forced to pay a payment of Rs 1.77% for each sale. They are forcing the retailer to become an Amazon re-seller, which would mean we are working for them. It will mean you cannot then work with their competitors. We raised our voice on this. This data is being used by them to show to the Competition Commission of India (CCI). A probe by the commission is on against them for this,” alleged Pathak.
A retailer said, “We have been talking to Samsung at different levels. But it has not worked. So, we were forced to go for this protest. throughout the country.” He pointed out that there had been a major drop in sales in the three days, almost by 80%.
There was a huge gathering of more than 35,000 mobile retailers in New Delhi on January 8 from across India to put pressure on the CCI, probing the charges against Amazon. Pathak feels soon the government will bring in change in the policy of retail trade in India, which will help retailers.
Mumbai retailer and AIMRA president Vibhooti Prasad wants a level playing field from Samsung or else they will be forced to take further drastic steps. “If they remain adamant, then we will go for a complete boycott. We are waiting for a suitable response from their end soon. We will talk over with all stakeholders across India. We have around 1.5 lakh offline retailers with us of which eastern region forms an integral part,” said Prasad.
Pointing out the fact that most of the foreign e-commerce sites are making profit by cheating the Indian government, Prasad said, “Our fear is that what Amazon has done, will be replicated with other e-commerce platforms.”
Rohan Shah, a Samsung distributor from Bhagalpur, Bihar though does not fully agree with what AIMRA officials have to say about the company. Pointing out that the brand has made amends after the concerns were raised by retailers, Shah said, “Samsung has already withdrawn their deal with Amazon Pay after talks with retailers. And regarding the complaint that offline stores should get similar products selling online, the company had declared last year that from January, this year, all the products which will be launched online will also be made available offline. One Samsung model was launched in January, which was made available offline too. M31, another model, is supposed to be launched on Feb 25, which is being simultaneously launched in both the platforms.”
On the ‘silent’ protest by the retailers in his area, Shah said, “I did not face any dip in sales and I have data to prove it. Only two of the many outlets did not sell the Samsung phones in my city. AIMRA might have projected it as silent protest but it was not so. The protests in Bhagalpur were done in an unethical way. AIMRA had told the retailers to complete all payments till Feb 10. Here, the dealers were told that you do not make any payment even if you had sales. Many of the retailers were told by local AIMRA leaders that Samsung has instructed them to put on black bands. Many of the company employees were also abused by the protesting leaders.”