The president and Governing Body of FAIITA, after prudently considering the favourable response received from Lenovo with reference to submitted Memorandum, has unanimously agreed to revoke the purchase deferment of Lenovo products with immediate effect, subject to Lenovo aligning their regional teams with regional IT Associations and clarify the process of agreed compensation on exceptional disruption of Prices across all GTMs including but not limited to Amazon, Flipkart, Paytm & LFR etc.All member State Associations/Federations are advised to further intimate their members to resume normal business with Lenovo, said, Saket Kapur, General Secretary, FAIITA.
Notably Purchase Deferment of Dell, Acer, Asus, products continues as per last Advisory till a favourable response is negotiated, Said, Champak Raj Gurjaar, President, FAIITA.
Further to the discussions on the memorandum, the following are the response from Suyash Singh, India’s Consumer Product Portfolio Manager, Lenovo India Pvt Ltd.
1. There is a market need of one Nation and nearly one Price of your product range to obviate customer confusion on correct time, price and place to buy.
Lenovo Response: We will provide a monthly pricing guideline for all end-customers throughout the year to ensure similar effective end-customer pricing across channels (Including but not limited to Credible Online/E-Commerce Portals like Amazon, Flipkart, PayTM, LFRs etc.) We are against any form of predatory pricing or price disruption and we will work with all stakeholders to build the ecosystem of One Nation One Price 365 Days.
We do not believe in growing one channel at the cost of others and believe in supporting all routes-to-market to have similar effective end-customer pricing. Lenovo has made efforts to do this actively, including in this year’s festival sale period and will commit to drive this in the days ahead.
2. Contractually B&M partners should be able to match visibly most competitive price of your products, moreover the brand owner/OEM ensure seamless earning of a minimum sustenance business margin of5% across entire product range.
Lenovo Response: Lenovo will enable the end customer to get a similar effective price across channels through the year without affecting contractual partner incentives and rebates.
In case of any variation or indiscipline Lenovo will quickly work to get the same corrected immediately.
In case of price disruption/predatory pricing continuing, any customer walking into a contracted/certified Lenovo partner store in that period will be offered the net effective disruptive price to successfully effect the sale, with the understanding that Lenovo will support contracted T2 partners and Lenovo certified T3 partners with appropriate sales out programs equal to difference between SRP and net effective disruptive price. This sales out support will be routed through the contracted T2 partners subject to purchase verification and end user verification. A detailed process note for end user verification and purchase verification will be communicated to our partners soon
3. During Sales Promotion period at online portals (or any other such promotional disruptive price fair), there will be a similar sale at B&M partners with similar pricing fully supported by Brand Owners, ensuring a minimum 5% Margin across entire product range.
Lenovo Response: Answered as part of Point 2 above
4. Brand Owners/OEMs shall inform all registered B&M partners at least two weeks in advance; about likelihood of Sales Promotion activity by OLS, and advise partners to inform all footfall customers about it and stock products that will sell during OLS sales, to be in sync with online.
Lenovo Response: As and when we come to know about any such online sale, we would inform the contracted retail partners about the same. This will allow the channel community to be better prepared for the same in terms of their stock holdings.
5. The brand owner shall also endeavor to augment the business in the offline channels during such discount periods proportionately to the surge in online sales of its products and provide special visibility through various marketing campaigns asper respective brand promotion strategies.
Lenovo Response: Lenovo executes various marketing campaigns across the year aimed at driving demand for our contracted partners. These include all effective ATL & BTL marketing media and mechanisms including TV, print and digital media. We shall continue to invest in demand generation in the same fashion going forward. We would especially invest in driving visibility for our channel promotions and activities to ensure strong consumer demand steered to our retail stores.
6. During sale period, products in stock of B&M partners of nearly similar specifications and configurations as being promoted by OLS will be treated as same and Partners shall be allowed to earn a minimum 5% sustenance margin on sale of these products during promotional period.
Lenovo Response: Lenovo will enable the end customer to get same effective price in all contracted retail channels. The effective price will factor in specifications, platforms, generation, aesthetics, and other components. As mentioned above, the normal partner incentives and rebates for partners will not get impacted.
7. A partner agreed Price differential matrix of Product Configuration/Specifications will be submitted by Brand Owner for arriving at stack price of various configurations of products, keeping in mind a minimum of 5% sustenance margin.
Lenovo Response: We will share the stack price of configurations with contracted retail partners as and when required. This will be updated once a quarter to factor in any changes.
8. All the price parity compensatory claims to be settled by Brand Owners within one week.
Lenovo Response: We will enable similar effective end-customer price for our contracted retail partners across channels and hence do not foresee a need for such claims.
9. Targets in post disruptive periods to all B&M partners shall be assigned on basis the actual sell out achieved by B&M partners and not construed to push inventory to them.
Lenovo Response: Lenovo provides target guidance for the quarter in view of the demand potential of the market using available external forecasts (like IDC, GFK etc). No target of Lenovo is built with the intent to push extra inventory. We also have a corrective redressal mechanism for targets within the quarter to ensure partners do not end up with unnecessary inventory.
10. In the event of termination of partner agreement, it shall be responsibility of brand owner to clear within reasonable time, the unsold inventories of the terminated partner.
Lenovo Response: Transition of contracted partners is managed as a core part of Lenovo’s policy where we ensure existing partners are not stuck with any liability on account of inventory.
11. During price disruption happened last festive sale our members are piled up with huge stocks for which viable solution is required from vendors so that there loses are covered and there stocks are liquidated.
Lenovo Response: If any Lenovo contracted partner believes that are carrying excess inventory of products purchased between 25th September and 15th October 2018 and would like to return some part of the same, we request them to contact their Lenovo RSM/SRGM to explore a one-time stock reversal approval.
Contracted Retail Partners willing to avail this benefit may contact the Lenovo team for getting their stock audited.
Extended Payment period proposal: We propose that the payment period to the tier 1 distributors of the unsold stocks of the impacted SKUs (IP330 i5 and IP320 i3, IP330s, IP520) purchased by contracted retail partners after 25th September’18 till 15th October’18 is extended till 15th December’18 without charging interest on the delayed payment period. The interest waiver on the delayed payment will be subject to clearing the 100% payment outstanding due to the Tier 1 distributors by 15th December’18. Contracted Retail Partners willing to avail this benefit may contact the Lenovo team for getting their stock audited.
We are in discussion with T1 to discuss the modalities of this proposal.
We are already talking to our contractual regarding potential target revisions where needed, and we will close the same on a case to case basis.
On top of the above we are launching various programs to spur demand and hopefully they shall result in a quicker turnaround of business for the Lenovo contractual partner. More details on these programs can be shared separately with FAIITA.
12. As a matter of fact, our Members are liable to pay overdue interest on alloutstanding to your Distributors consequently ad idem interest is justifiably payable by you to them towards overdue incentives/back-ends claimed.
Lenovo Response: As a process we communicate the applicable Rebate to the Eligible Contracted Channel Partners within 45 Daysof the Closure of the Programs. Based on this calculation,partners are advised to raise the Tax Invoice for the purpose of claiming the Program benefits. Upon successful submission of the above documents all the claims will be release within 2 weeks.
With the above points, Lenovo once again reiterates its stance of treating the business ofcontracted retail partners with utmost importance and that it would continue to work with all its contracted retail partners with this view, for which it has always been acknowledged for.