E-Commerce vs. Brands: A serious conflict?

Kul Bhushan | Published 20 Jun 2014
E-Commerce vs. Brands: A serious conflict?
  • Brands recently released advisories against buying products on e-commerce sites. How valid is their stand? How does it impact the e-commerce segment? What does the e-commerce industry think? And most importantly, what does it mean for users?

Earlier this year, brands such as Lenovo and Toshiba warned customers against purchasing their products from e-commerce sites such as Snapdeal, Flipkart and Amazon India. The companies in their advisories said that Snapdeal, Flipkart and Amazon India are not the authorised resellers of their products. Recently, Gionee also released a similar advisory, warning not to purchase their products from any online retailers.

Such advisories from the companies, stressing on not buying products from e-commerce sites, come amid a wide push to the e-commerce segment in India. Most of the e-commerce sites are heavily focussing on electronic gadgets including smartphones and tablets. In fact, ASSOCHAM's paper on “Online Shopping - Review & Outlook in 2013” says electronic gadgets market was the third largest contributor to the e-commerce growth in India.

Therefore, advisories against e-commerce sites certainly creates a state of confusion, and to some extent discourages online shopping. We analyse the stand of these companies.  How valid is it? How does it impact the e-commerce segment? What does the e-commerce industry think? And most importantly, what does it mean for users?

Let’s take a look at the statements from Lenovo and Toshiba on the issue:

"What we have noticed in the past few months is that some of these sites, and largely due to a marketplace kind of a set up, there are a lot of resellers that have cropped up, which are selling at very low predatory prices. These we believe may or may not be an authorised or genuine products," Mr. Sudhin Mathur, Director, Smartphones, Lenovo India is quoted as saying.

“Toshiba India does not have any direct arrangement with e-commerce websites, and they are not authorised to represent about the quality or fitness of any Toshiba-branded product,” said a Toshiba in a statement to The Hindu.

Interestingly, camera giant Nikon had issued a similar statement last year:

“Please note that e-commerce websites like Flipkart (Flipkart Internet Private Limited) and Snapdeal (Jasper Infotech Private Limited ) are not our authorized partner/dealer in India, we advise you to check the warranty entitlements while buying from online portals.”


Creating panic?

Though advisories from these brands seem to protect customers' interests, it certainly creates a state of confusion.

“The advisory issued by smartphone brands is definitely in the interest of consumers. But we oppose the smartphone brands stand because through this action they are alienating an entire channel and creating a certain amount of panic. A forum needs to be created between online retailers, offline retailers and brands to address this particular issue,” says Mr. Mehul Jobanputra-CEO and Cofounder of DesiDime.com.

As pointed out earlier, brands have especially cautioned customers about 'warranty' when purchasing their products online. However, e-commerce sites have categorically said that they sell genuine products which are eligible for warranty.

“We can assure our customers buying Lenovo products on Flipkart.com that they are genuine. Customers will continue to enjoy the warranty and services extended to all original Lenovo products as always,” Tech2 quotes Flipkart as saying

In an interaction with Digit, a Snapdeal spokesperson said: “Snapdeal.com is an online marketplace where authorized sellers list their products on the platform. We take utmost care to list products only by those sellers who have the necessary authorization to sell these products. These authorized sellers already selling offline are the ones listed on our site and are selling Lenovo and Gionee products online through our platform. Customers can rest assured that all the products including Lenovo and Gionee products which are available on Snapdeal.com are genuine and eligible for warranty. Further, being an online marketplace, the pricing decision solely lies with the seller listing the product.”

“The concern regarding the warranty of products sold is warranted. A consumer will be a repeated customer of the brand when he/she feels that the brand is assuring him/her of the product quality. So we completely support the concern raised for the warranty of products sold online. After sales service is as important as the pre sale service,” says Mr. Mehul Jobanputra on warranty issues.

Just a gimmick or actually serious?

Brands discouraging customers to buy their products from e-commerce websites is understandable to some extent. Online stores usually offer products at lower price as compared to physical stores – a key feature that's been driving the e-commerce sales in India.

That said, these brands have spent massively on setting up distribution and channel partners across the country. As pointed out in our previous analysis, physical stores in India have taken a huge hit due to the surge in online sales. It certainly appears to be one of the main reasons for brands asking users not to buy products from e-commerce websites.

“It may be hurting the brands to a certain extent. But it is also giving them access to newer customers who may or may not have brought their products in the first place,” opines Mr. Mehul Jobanputra.

Formal tie ups: an unlikely solution?

Trend of exclusive tie ups has picked up of late. Flipkart-Motorola exclusive tie up for Moto G and Moto E smartphones certainly gives a peak at the future evolution of e-commerce and ever-changing customers' preferences. Formal agreement, however, is bit different from the exclusive tie ups. Such arrangements sought by smartphone companies are aimed at putting a check on huge price discrepancy of products sold online and offline.

That said, will e-commerce sites be up for such formal tie ups? And if proposed - agree not to sell a device at a lower price? Is it even possible in the current scenario?

“It is not feasible in the current industry structure. Before any ideal arrangement, all the stakeholders need to come together to address the issues from its root cause,” adds Mr. Mehul Jobanputra.


First and foremost priority should be protecting customers' interests. While smartphone companies have to acknowledge changing customer preferences – who have greater inclination towards online research and shopping and comparison, e-commerce websites have to address the warranty concerns by educating customers and prominently display warranty and service related info on their sites.

E-commerce websites are dime a dozen, and users are suggested to research well before buying a product online. The research includes reading through user reviews, information on manufacturer warranty and service, and credibility of the website or seller (in case of an online marketplace).

Do you support/oppose brands' stand on buying products from e-commerce websites? What advantages/flaws do you see in the current system? What's your take on the issue? Let us know your views in the comments section below:

Also read: How exclusive online launches are boosting e-commerce in India


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