How Sony, Samsung, Panasonic and others track store sales to stop resale of products
Consumer electronics and smartphone makers have started restricting supplies to retailers and resellers and tracking their sales and inventory to ensure they don't sell excess stock through e-commerce sites at huge discounts.
Brands such as Sony, Samsung, Panasonic and Canon have identified several instances of traders or resellers resorting to distress online sale to clear inventory for cash flows, particularly since consumer demand has been erratic in the last couple of years.
While this, on the face of it, may not appear to impact the manufacturer, top brands say arbitrary discounting on their products in ecommerce sites affect their retail partners in general and modern trade — which account for more than 90% of their demand — with consumers demanding discounts, and harm their brand image. "Extensive discounts also impacts the brand's premiumness and positioning in the market," said Kenichiro Hibi, managing director at Sony India.
He said Sony is restricting supplies to minimise chances of distress sales. "It is a way to maintain hygiene in the market by supplying appropriate volume. It is a way to ensure there is fair trade," Hibi said.
All top companies have set up processes to track actual sales at the store level for each product almost on a daily basis.The retailer is required to report such sales through the company's internal software or to distributors who updates the company on sales and unsold inventory in the market.
Some companies have even set up a dedicated team to randomly pick up products sold online to understand whether they had originally sold to the concerned seller or not. In case of any discrepancy, the companies are pulling up the sellers and retail partners, and even temporarily curbing supply of products, said senior executives of three leading retailers.
A senior executive with a top retail chain said almost all top electronics and smartphone brands are trying to streamline their distributors and trade intermediaries so that there is strict control on inventory.
Another senior trade executive said Korean giant Samsung has pulled up some trade partners, including one large retail chain, after it found out some models billed to them were sold online at a discount either by them or through another third-party.
A questionnaire sent to Samsung India did not elicit any responses till Monday press time.
Consumer electronics and mobile phone makers have been trying to fight excessive discounting by e-commerce sites, which create a pricing disparity in the market and impact profitability of brick-and-mortar retailers. Now many of them are looking to work with online suppliers.
Alok Bharadwaj, executive vice president at Canon India, said the company has framed channel hygiene rules such as control over inventory supply for all its distributors so that both the offline and online markets can happily co-exist.
"We had earlier tried to physically prevent goods reaching online but we realised it's a leaky bucket. Hence, we are learning how to coexist in both the markets since several consumers are actually buying more and more from e-commerce," he said.
Panasonic India managing director Manish Sharma said the firm has set norms for standardised inventories across all product categories to ensure optimum level of goods to cater to the market requirement.
"We are also in talks with our ecommerce partners and aligning them with our product positioning, model-wise pricing and the value adds which they can offer on Panasonic products," he said.
A senior trade executive said manufacturers' move to curb supplies may not help in checking significant discounts online in the long run because even brick-and-mortar retailers are running heavy discount deals, like the recent Independence Day sales, to clear inventory. Some third-party online seller can buy the products in such sales and sell them on some e-commerce site to make quick money, which would be difficult to monitor, the person added.
Consumer electronics and smartphone makers have started restricting supplies to retailers and resellers and tracking their sales and inventory to ensure they don't sell excess stock through e-commerce sites at huge discounts.
Brands such as Sony, Samsung, Panasonic and Canon have identified several instances of traders or resellers resorting to distress online sale to clear inventory for cash flows, particularly since consumer demand has been erratic in the last couple of years.
While this, on the face of it, may not appear to impact the manufacturer, top brands say arbitrary discounting on their products in ecommerce sites affect their retail partners in general and modern trade — which account for more than 90% of their demand — with consumers demanding discounts, and harm their brand image. "Extensive discounts also impacts the brand's premiumness and positioning in the market," said Kenichiro Hibi, managing director at Sony India.
He said Sony is restricting supplies to minimise chances of distress sales. "It is a way to maintain hygiene in the market by supplying appropriate volume. It is a way to ensure there is fair trade," Hibi said.
All top companies have set up processes to track actual sales at the store level for each product almost on a daily basis.The retailer is required to report such sales through the company's internal software or to distributors who updates the company on sales and unsold inventory in the market.
Some companies have even set up a dedicated team to randomly pick up products sold online to understand whether they had originally sold to the concerned seller or not. In case of any discrepancy, the companies are pulling up the sellers and retail partners, and even temporarily curbing supply of products, said senior executives of three leading retailers.
A senior executive with a top retail chain said almost all top electronics and smartphone brands are trying to streamline their distributors and trade intermediaries so that there is strict control on inventory.
Another senior trade executive said Korean giant Samsung has pulled up some trade partners, including one large retail chain, after it found out some models billed to them were sold online at a discount either by them or through another third-party.
A questionnaire sent to Samsung India did not elicit any responses till Monday press time.
Consumer electronics and mobile phone makers have been trying to fight excessive discounting by e-commerce sites, which create a pricing disparity in the market and impact profitability of brick-and-mortar retailers. Now many of them are looking to work with online suppliers.
Alok Bharadwaj, executive vice president at Canon India, said the company has framed channel hygiene rules such as control over inventory supply for all its distributors so that both the offline and online markets can happily co-exist.
"We had earlier tried to physically prevent goods reaching online but we realised it's a leaky bucket. Hence, we are learning how to coexist in both the markets since several consumers are actually buying more and more from e-commerce," he said.
Panasonic India managing director Manish Sharma said the firm has set norms for standardised inventories across all product categories to ensure optimum level of goods to cater to the market requirement.
"We are also in talks with our ecommerce partners and aligning them with our product positioning, model-wise pricing and the value adds which they can offer on Panasonic products," he said.
A senior trade executive said manufacturers' move to curb supplies may not help in checking significant discounts online in the long run because even brick-and-mortar retailers are running heavy discount deals, like the recent Independence Day sales, to clear inventory. Some third-party online seller can buy the products in such sales and sell them on some e-commerce site to make quick money, which would be difficult to monitor, the person added.
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