Flipkart received so much flak from its consumers on the “Big Billion Day” sale that they had to issue an apology the next day. If that wasn’t enough, Flipkart is now said to have angered top electronics firms like Sony, LG and Samsung, who are miffed at the e-commerce site for selling their products at extremely low prices. Some of them have even suspended fresh sales to the online retailer and are considering legal action for ‘predatory pricing’.
A Times of India report states that these low prices of e-retailers is putting severe pressure on brick-and-mortar shops and some companies have decided to suspend supplies to Flipkart till the time they get an undertaking that prices will not be slashed to ‘unrealistic’ levels. “This is a clear case of predatory pricing just to shoot up traffic at their website, and build up valuations unrealistically. This is not acceptable and we will ensure that this does not happen again,” an executive from one of the companies told TOI.
While LG confirmed that they refrain from dealing with online retailers and dealers for their products, Sony India sales head Sunil Nayyar said that they will hold discussions with online retailers to make sure the pricing is realistic and that the ‘price hygiene’ is not destroyed. Other companies are also considering legal action as this pricing policy is against their brand positioning and are curious on how these online retailers are able to sell their products below the cost price.
Big companies are being pressured by physical retailers as these slashed prices on e-commerce sites are costing them a lot of business, especially during festive seasons. Offline retailers have threatened to boycott these companies’ products over pricing concerns. Succumbing to this pressure, Samsung has reportedly decided to take the offline route and give exclusive selling rights to offline retailers for 48 of its smartphone models, including the Galaxy Alpha and the soon-to-launched Galaxy Note 4.