FAIITA Issues Advisory to Counter Predatory Pricing by Online Marketplaces

With an aim to put a dent on the ongoing malpractice of predatory pricing, the newly formed Federation of All India IT Associations has issued an advisory to its members and the overall channel community in order to counter their onslaught on the OIT channel business in the country.

fAIITAWe had a meeting with TDAI, MAIT and major brands on Nov 21, 2014 at New Delhi. In the meeting we all agreed that due to predatory pricing strategies of electronic marketplaces (OLS), the conventional channel business is majorly disturbed and several regional associations have brought this to the notice of all concerned over the last 12 months. We do appreciate and understand that Brands/OEMs/NDs are all equally concerned and are trying to find a solution which will provide a level playing field to all,” explained a statement by the FAIITA.

The association further added that post its meeting of November 21, 2014 the association members had agreed to advise all IT associations to withdraw their proposed stand of voluntary restraint of purchases from National Distributors with effect from Nov 24, 2014 with the clear understanding that some corrective action would be put in place by Brands/OEMs on or before Dec 7, 2014.

“We had also requested all of you to answer a simple questionnaire on your policies related to OLS/channels. We received response only from Lenovo and none of the others. We have received communication and advisory from several brands post our meeting and we also had con calls with some teams. We regret to state that while some brands/OEMs made attempts to address the issue, there were several brands who maintained absolute silence,” the statement added.

“We once again reiterate that we are completely in favor of e-Commerce and would like all user/customers to take the best advantage offered by e-Commerce. However the predatory pricing strategies adapted by the OLS is hurting the conventional channels so badly that we are compelled to take a stand which we think is appropriate for us at this point in time. Though we acknowledge the concern from OEMs/Brand owners about the predicament of the channels, we regret to inform you that we have not seen any concrete action plan from your side which will provide relief and demonstrate to our members that a corrective mechanism which is fair to all, is put in place by the brands in support of all channels,” the statement from FAIITA explained.

FAIITA also states that instead of addressing the root cause of the problem (predatory pricing by OLS) , in its opinion, OEMs/Brands are trying to further regulate the channels by complicating the process by introducing authorised / unauthorised, online/offline definitions which are not really going to address the core issue of predatory pricing.

“In view of all the above FAIITA is advising all channel partners / resellers through their respective associations the following:
1. Advice all members to prepare for voluntarily refrain from purchasing any goods from NDs/OEM’s from 15t h December 2014 to 22 n d December 2014.
This advisory is valid till December 22, 2014 and will be reviewed every working day for extension or release of any Brand based on what OEMs/Brands do to put a corrective mechanism in place, to check predatory pricing. Associations are further advised that OLS will be coming up with predatory pricing sales (deep discount) for GOSF, Christmas and New Year and they must evaluate and advise their members to get prepared to face the same such that they don’t incur loss and report to their State presidents on the price parity from each sku of every Brand,” the statement further added.