Offline retail lobby alleges Samsung of online offers

KOLKATA: Brick-and-mortar cellphone retailers have alleged that Samsung Electronics is “asking retailers to register on Amazon Pay”, the digital payment service of the ecommerce giant. This comes at a time when the competition watchdog is investigating the business practices of ecommerce marketplaces and the exclusive arrangements that smartphone brands have with them.In a letter to Samsung India, offline retail lobby All India Mobile Retailers Association (AIMRA) said, “We believe Samsung is aware that a CCI (Competition Commission of India) inquiry has been initiated against the business practices of Amazon and Flipkart… Online portals are indulging in unfair and unethical business with the help of brands, especially Samsung. Today, Samsung is the only brand with a tieup for exclusive products, like the Samsung-M Series, with online channels.”The February 1 letter, a copy of which has been reviewed by ET, is addressed to Samsung India’s newly appointed managing director, Ken Kang.The letter said that to avail of Samsung’s latest cashback promotion, 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 ecommerce shopping.AIMRA said that offline retailers, by default, will get registered as Amazon sellers in the marketplace when they sign up for Amazon Pay as a business entity to receive payment for the handsets sold."Why is Samsung influencing and diverting our customers to the Amazon portal? This is a clear conspiracy to grab our customers and kill our business permanently," said the letter.Samsung, the country’s second largest smartphone maker after Xiaomi, has rolled out 5% and Rs 1,500 cashback offers, depending on the phone models, when payment is done through Amazon Pay.AIMRA’s letter said, “Samsung has indulged in another unfair and unethical agreement with Amazon to burn money by forcefully registering mobile phone retailers on Amazon Pay, which helps Amazon to prove to the government, department for promotion of industry and internal trade and CCI that mobile retailers are doing increased business, paying DBD and are the ones giving discount to customers.”DBD, or dealer buy down, is an arrangement whereby retailers have to bear 1.77% of the cashback amount as per the Samsung promotion, which AIMRA termed as “exploitation” of retailers.The association has alleged that Samsung’s employees and distributors are forcing retailers to register as Amazon sellers for Amazon Pay and threatening to stop supplies if they fail to register.Email queries sent to Samsung India and Amazon India remained unanswered as of press time.An industry executive aware of Samsung’s plan said the initiative of cashback through digital wallets like Amazon Pay is to offer digital payment options to consumers, incentivise them, and is a part of its O2O (online to offline) strategy.An AIMRA member said the association has called for a national meet on February 7, when it will also evaluate whether to completely ban Samsung in offline stores if the company does not pull out the Amazon Pay offer by then.In its letter AIMRA said this “blatant support to online channels will KILL (sic) Samsung sales in the offline trade in India, just like in China”.Retail lobbies including AIMRA, The Confederation of All India Traders, and Delhi Vyapaar Sangh have been complaining to the government about deep discounting by ecommerce firms and exclusive arrangements between marketplaces and smartphone brands which has badly hit offline business.Ecommerce accounts for 35% of all smartphone sales in the country.Offline retailers have said that Diwali sales last year were the worst ever for the trade due to ecommerce exclusive models and discounts.“Samsung is offering 5% cashback on handsets paid through Amazon Pay. If Samsung is burning 5%, then why through Amazon? Why not bank cash back or direct discount? If Amazon is offering this discount and burning 5%, then firstly this proves that Samsung is supporting Amazon, as 5% is big amount to further subsidise product and to make it more attractive. And what is intake for Amazon in lieu of burning crores of rupees,” the letter said.

from Economic Times https://ift.tt/3bgjk6a