Discussion on brick and mortar stores

[geturchiru]

Apart from pricing, does anyone have experience with returning merchandise. My Mass Effect 3 DVD had defective packaging from manufacturer (paper glued to back of disc) so it didn't work. When I called FK support, they sent a free replacement and the original discs were picked up by the courier. On the B&M side, I was unable to return an unused T-shirt at Shoppers Stop (had a small black mark on the sleeve) which I hadn't noticed while purchasing it a day before.

Yes, that's how you should be competitive not by unfair means and being a online store they have to have such policies as we'll not be "touching" the products while buying. Even in my case, I went to Croma which is near by to check the TV before buying online. What if I cannot check the TV before buying and FK does not take it back.

 

[cranky]

FWIW, Here's a bit of marketing perspective (long post warning):

Across most categories, the retailer has margins of between 25 and 50% to play with. Franchised retail is usually at the upper end of that number and multi-brand at the lower end. This is why you can get a 15-20% discount on most products without any major issues. The MRP is a notional figure that assumes that people will ask for a discount, so it includes sufficient margin. For example, look at the printed MRP on a motherboard or processor and compare it with your bill. Most other categories, specially where importing is concerned - which is 90% of all goods - sees almost exactly the same figures.

This also means factory stores and franchises don't hurt when sales are offered at 'Flat 40% off'. That 40% is not a loss making figure, it forgoes most of the net margins for higher realisation due to volume. There is still a 5-8% margin that remains and if you triple volume (a very conservative figure) you end up making more money than regularly having to give a 20% discount. The issue is that traditional retail has had years of comfortable living where MOPs and hard floors on pricing are the norm. Online is not bound to follow the same rules.

The problem that traditional retail has is twofold. One is total sales, which is the smaller problem, and basically comes from the fact that we are in a recession and liquidity has dried up. Hard cash is tough to come by and the typical Indian does not buy as much on credit as on hard cash. This means that shopping money is much smaller than it used to be. Fortunately, online retail is still a miniscule fraction of traditional retail so this problem is not as big as it seems except in certain categories. If the electronics industry has seen a growth of 4% and the online market is 5% of traditional retail, it would mean a maximum of 1% of cannibalisation.

The bigger problem is that all the VC money that is flowing into the e-com portals is being spent on marketing and customer acquisition. It is a mindspace problem - basically creating a fork in the consumer's mind that online is cheaper and a good place to shop. It isn't always true, but over time this impression can be created. And this would bother traditional retail most of all, as it is competing for future business. Unfortunately, it is a problem they have created to begin with. Undercutting is one of the prime tools of B/M retail, and they've been doing it for years. It is the very reason that brands stepped in and began to formulate and enforce MOPs. In most countries, the MOP guidelines from India would amount to unfair trade practice. And even manufacturers are not totally clean when it comes to discounting product, except they would never do it directly.

Samsung and LG etc have been doing this for years with their 'scratch card' and similar schemes. For example, If I had to spend 50cr on a campaign for one sale (for scale, an election campaign for a political party can be expected to cross 500cr), I would spend about 80% of that on dissemination and 20% on the 'gifts'. All FK did was discount the products directly, and that is what got the retail industry's goat. Discounting your product 'cheapens' their image, and that is why they are sulking. None of them have got with the program, that brands mean nothing, it's basically product feature and price that ignite the purchase decision. After all, everything is made in some cheap sweatshop in China with workers in horrible conditions at the lowest pay, and all are designed to last exactly as long as the warranty.

As for the moaners, I am pretty sure FK didn't promise that everything on sale would be offered for an unlimited time to all comers. It was very clear that the sales would be on a limited quantity of products and for a short period of time. So maybe 5-10% of all in-stock items would be offered at a special price. Therefore it's like a lottery, if you get it well and good if not, better luck next time. You should see how riotous the situation gets in the US outside Apple or Sony stores when a new iPhone or Paystation launch (typo is intentional), and how people shop on Black Fridays (actual violence occurs). Not everyone ends up lucky. The typical Indian mentality of entitlement is rife in all the negative comments I read (technical issues aside, those are real problems and I faced quite a few).

Personally, I'm chuffed that I snagged a pair of 770s at a massive discount, but I was also pretty sure they wouldn't fulfill the order. Was quite taken aback when I saw they shipped it, but I'll believe it when I see them doing SLI

 

[ayanavish]

It may have sent the cash registers ringing, but the bumper 'Big Billion Day Sale' online splash by Flipkart has pitched the country's largest e-tailer head-on against top consumer goods players such as Samsung, Sony and LG, some of whom have suspended fresh sales to the online retailer and are even considering legal action for what they term as "predatory pricing".

Further, a senior executive said his company, which deals in white goods, may not be able to provide warranty on some of the products that are sold through e-tailing platforms. "These goods are being sold through unauthorized channel partners, which is like buying from the grey market. How can we provide a service cover?"

http://timesofindia.indiatimes.com/...ers-log-off-Flipkart/articleshow/44646159.cms

It is a sight that's becoming increasingly common across electronic and mobile phone stores: the customer walks in, checks out the product, its price, and then flips open his smartphone and logs on to an e-tailer's website to check the online price. And more often than not, finds the price offered by e-tailers to be much more attractive.

The result: poor sales at the brick-and-mortar shops as online stores such as Flipkart, Snapdeal and Amazon are snapping customers away. Not just for mobiles and electronic goods, but white goods, shoes, clothes, household goods, books — you name it. The online discount euphoria has hijacked the Diwali rush from retail showrooms this year, and not surprisingly, the mood in markets is distinctly downbeat.

"Footfalls at dealerships this time are nowhere near the levels they usually are during the festival season. The days leading up to Diwali have traditionally been bumper days for us. But the excitement is missing this time around," says a retailer at Gurgaon. "We cannot match the prices offered by e-tailers as we have higher overhead costs."

http://timesofindia.indiatimes.com/...li-for-retail-stores/articleshow/44727456.cms

 

[pauldmps]

Let me analyse the situation ass per my understanding:
1. The retailers are complaining that online sites are selling at a lesser price than the cost price. This can mean two things: Either FK is selling at loss and closing the revenue gap by those fundings they get else they have some other means of acquiring goods at a lesser cost price than B&M sellers. In the first case, I believe it is better for both the offline retailers & govt. to wait and watch since this type of business model is unsustainable in the long run and will collapse. In the second case, it is the responsibility of the OEM to make sure the distributors charge the same for all.
2. The shopkeepers of shops selling tech products are big thugs and cheats (no offence meant). I believe that they have to now mend their ways after this e-tailing revolution. For example, the shopkeeper tried to sell me my laptop at the MRP. Only after I showed him the price at FK, he charged me the FK price. The shopkeepers try to exploit the fact that the MRP listed on the products are way above the selling price and hence can charge anything below the MRP and there is a need to bargain (which I hate). Plus selling duplicate, refurbished, wrongly labeled & used goods is pretty common. And top of they will try to convince you into buying old stock goods & goods having better margins. I have had cases where my friends we convinced to buy 2nd gen laptops at time when 3rd gen were easily available, HP laptop when he went to buy Sony citing HPs are better , phones like Galaxy S Duos at 10k which is heavily outdated, etc. I think these people well deserved it.

 

[chiron]

As far as I'm concerned the main advantage with online retailers is providing a place for recording complaints. Our vyapari vyavasayi's have no problem getting together and fixing prices and this has been happening for ages. imo the broadband tariff/fup are the tech equivalent of the retailier's practices. And in my experience customer service is entirely dependent on the individual seller's sense of decency than anything else.

Considering, this I won't be shedding any tears over the local shopkeeper losing business to online sales... at least not for the time being.

 

[Sobirvs]

So, tomorrow if some XYZ B&M retailer starts selling at iPhones at 10% discount, so retailers keep their mouth shut since its not online? Ha ha, I don't think so.

No B&M person can give discounts, and specifically for iPhones anyways, as most discounts come officially or have exchange offers directly from Apple India.

 

[Sobirvs]

@Sobirvs If you think the technology used in the products they're selling is what's important, then you don't understand the business at all. We're discussing the future of retail business here, not of the products they end up selling.

What's stopping these offline retailers from using their stellar union power to collaborate and create an even better e-commerce solution? I'm sure if they show user traction they'll get funding too.

What's stopping them from giving the best possible product recommendations (instead of trying to push a product with higher margins)?

What's also stopping them from giving the best possible customer service?

I understand business completely mate. I'm sure you would too if you were into this line, You'd completely understand where I'm coming from. future of retail and products are both connected to each other.

You think retailers pushes the products with higher margins and flipkart and other e-tailers don't do that? Believe me when I say this, all the products on flipkart's homepage right now are the ones which gives them the maximum margins possible. They won't advertise a product on specifically their homepage where they are getting very less margins or possibly losses. You ever saw the Nokia 1020 for 13,999 on their homepage? My point.

Customer service? I believe a simple google search will tell you flipkart's services is amazing or not. Also, retailers, you have to understand only and only provides SALES. No, they don't or ever provide customer service. That's the part where OEM's comes in with their service centers.

 

[bond_bhai]

So, I work hard, put in late nights and hours of toiling and get paid end of the month. That money, be it 30K per month or 1L or 5L, its still because i put in efforts to "earn" it. Now, before spending "my money" somebody wants me to think about my neighborhood store guy, think about his welfare, his family and his business? Why? Does the store guy think about me, long hours i work and how i earned that money - before putting a "tag" on the product? I don't think so. Just as an example, i asked a "local hardworking family guy who owns a neighborhood store about the price difference between him and the online store - he just said - "This is the rate, if you want buy it or go buy in internet." The other answer i get is "You are S/w Engineer, you can spend more money". Plus - I get amazing customer service - no returns and refunds. If they do offer, it has be on weekdays between 12-4 when there are no customers in the store. I have to explain to him as if i am doing a crime in returning the product.
End of the day, Boss, the store guy thinks abt himself,. I will do just that, think abt myself. And don't gimme statements like "Oh, thats why our country is like this" and "What if it happens to you or your mom/dad" emotional blackmail. Its my money, i want to save most of it (bcos our country does not have "social security" system in place) than think abt somebody who gives a damn abt me.

 

[Onemufc]

Flipkart provides me more customer service for ONE order than the whole of BM have provided me in my lifetime. End of discussion on that front.

 

[asingh]

@asingh They can't retail at the same price point is the faults of OEM's, not the dealers. You probably haven't heard of this or may be you have but OEM's have managed to keep the retail business balanced , how? SRP, MOP. SRP is introduced by Samsung only for now and only for electronics (other than Mobiles) and MOP is introduced by local dealers with their union and it is working wonderfully for them. These are the terms by which no dealer have the balls to give any discount lower than that. If a dealer is caught red handed doing otherwise get's his stocks stopped down and 2nd violation of this rule get's you unauthorized dealer for life. I guess my point is same as I said on my previous post, it's all about being fair. Sure dealers CAN sell at the same price point as flipkart, they won't be hurt doing that but they are just not authorized doing that and have restrictions from the OEM's and market managers. So dealers have 2 choices , either cheat OEM's but that will get them thrown out of the market or just go against flipkart and other e-tailers legally. You just can't argue with oem's managers, coz for starters they know so little, even a 15yro knows much more than them, I wonder how they get recruited, and 2nd they don't listen.

for now, I have to say this only and sure we can have a civil way of doing this.

That is the thing. The whole scenario has to be thought out and OEM's and dealers and end-point sellers have to come to a common ground. If the OEM distributor is calling the shots then the B&M set-up have no option but to fizzle out. By reaching out to the government the B&M people are just requesting for a choke on FK, which is a bad attitude. It is a cliched situation.

 

[Sobirvs]

Why???
Why do I have to be sympathetic to a rude un-knowledgeable and eternally trying to rip-me-off B&M shop?

This attitude....

Though rip-me-off is something I completely disagree off, as retailers hardly get 2-5% margins on every product a OEM makes, unknowledgeable conditions is something to agree about. But see, OEM's are helping retailers here aswell. Most people who start B&M shops are people who either had much money but were not literate enough. So, they start those shops and makes a living. Now, sure they don't know much about products but what OEM's do is, assign a sales person to them every month. This is happening to every B&M shop, and depends on OEM to provide the sales rep. For me - Sony, Kent, IFB, and Samsung has started the initiative. This will only improve in future.

 

[asingh]

It's not anybody's fault, if you ask me. It is what it is. The big fish eating the small fish.

I've already aired my views on another thread but I'll repeat myself here briefly. The problem here is of predatory pricing. When traders/retailers find online prices lesser than their cost price, how are they expected to compete? It is frustrating from their pov when they can otherwise fully satisfy a customer/client yet lose out on account of predatory pricing alone.

Whether they require protection is debatable. Overall, whatever's best in the interests of the nation will need to be decided by the powers-that-be.

All I'm saying is, most of the retailers do not "deserve" to have businesses (in which they have put in their life savings) shut down. Sure, these are the business risks one has to contend with. But the "serves them right" attitude of people commenting online seems wrong to me.

That is what is happening. The big ones will gobble the small ones in the big eat. It is not only about aggressive pricing. See how the B&M personnel behave with clients. They are outright rude, palm of expired goods, and refuse to give change. People are basically fed up, asking for goods and not getting what they want or having to compromise. Going to a B&M is a compromise..! If regulation from a pan-India level comes in for FMCG and white goods, then we will typically be living in a Socialist environ. I really would not like that.

 

[avi]

No B&M person can give discounts, and specifically for iPhones anyways, as most discounts come officially or have exchange offers directly from Apple India.

That was just an example.

Just tell me, if a B&M gives discount, at its loss, what do other retailers do?

 

[Sobirvs]

Flipkart provides me more customer service for ONE order than the whole of BM have provided me in my lifetime. End of discussion on that front.

Customer service as I said earlier is provided by OEM's and not B&M shops. You can go shit on OEM's for the support.[DOUBLEPOST=1412835180][/DOUBLEPOST]

That was just an example.

Just tell me, if a B&M gives discount, at its loss, what do other retailers do?

If caught, other retailers don't have to do anything, sales manager will not give authorization for the products to that B&M specifically and not goods aswell.[DOUBLEPOST=1412835371][/DOUBLEPOST]

Now, before spending "my money" somebody wants me to think about my neighborhood store guy, think about his welfare, his family and his business? Why?

Who told you to think about neighborhood store guy's family? What I'm saying is, get the prices fair that's all. That has to be regulated. And after it's done, everyone has a choice to buy online or offline, no? Tell me what wrong I'm saying here.

 

[Sobirvs]

That is what is happening. The big ones will gobble the small ones in the big eat. It is not only about aggressive pricing. See how the B&M personnel behave with clients. They are outright rude, palm of expired goods, and refuse to give change. People are basically fed up, asking for goods and not getting what they want or having to compromise. Going to a B&M is a compromise..! If regulation from a pan-India level comes in for FMCG and white goods, then we will typically be living in a Socialist environ. I really would not like that.

That's the thing, you cannot make everyone happy. But max you can do is be fair to everyone. Let's take an example of outside of tech goods. Now , we got our freedom on 15th aug, what if the freedom was given to only specific states and not others. The one who get's the freedom would be happy and the ones who wouldn't , won't be. Can't make everyone happy but we all know what happened.

wait that's a shitty example isn't? but I hope you get the point I'm trying to make.

 

[letmein]

Yes, the thing India needs is more regulation and red tape. How about blocking ecommerce sites after business hours and on holidays (as it is unfair for traders whose shops open from 10AM - 8PM only)

 

[Onemufc]

Customer service as I said earlier is provided by OEM's and not B&M shops. You can go shit on OEM's for the support.[DOUBLEPOST=1412835180][/DOUBLEPOST]

Thats the point. My experience with online will always be better because I have a 30 day replacement warranty compared to 30 seconds in BM shops.

I went to Chroma , Sangeetha and the phone store over the weekend for enquiring.

When the guy at sangeetha could not match the pricing at the phone store the guy started blabbering that they dont provide proper bill and all. In fact the bills provided by them are same. Chroma guy actually tried to sell me the display piece. LOL

There was a time when BM shops had the upper hand and the attitude that they displayed was absolutely dismal. Now I shit on them because I am the king and it would remain that way. Swallow that Pill or get bankrupt.

 

[chiron]

Customer service as I said earlier is provided by OEM's and not B&M shops. You can go shit on OEM's for the support.

Are you implying that customer service solely limited to after sales support/warranty claims? In that case why drag your ass to the local shop and spend more money on something you can buy online and get it delivered at your house the same day?

As far as I'm concerned the b&m chains are places where you can try out the display pieces and then buy the same thing online.

 

[Sobirvs]

Yes, the thing India needs is more regulation and red tape.

Sometimes they aren't that bad. Try not to make a point but actually giving this a though for atleast 15 minutes, you'll feel kinda guilty that regulations sure have some point otherwise they wouldn't be made.

 

[Sobirvs]

Thats the point. My experience with online will always be better because I have a 30 day replacement warranty compared to 30 seconds in BM shops.

I went to Chroma , Sangeetha and the phone store over the weekend for enquiring.

When the guy at sangeetha could not match the pricing at the phone store the guy started blabbering that they dont provide proper bill and all. In fact the bills provided by them are same. Chroma guy actually tried to sell me the display piece. LOL

There was a time when BM shops had the upper hand and the attitude that they displayed was absolutely dismal. Now I shit on them because I am the king and it would remain that way. Swallow that Pill or get bankrupt.

Actually in B&M shops it's not even 30 seconds, but I believe OEM's service centers have 7 day rule on specific products. But you know this discussion is going from one point to a complete other point i.e you are butthurt that you didn't got the importance you deserved as a customer. As I said above you will find millions of people also not satisfied from flipkart all over the internet.

Also, there was a rumor about flipkart's getting funded by that black money and the money coming from corrupt ministers and their money which is in swiss banks no? Now, people have got problem with black money and everytime they say that , that money should be brought back in India, but when the same money is served to flipkart, people are okay with it? I'd say hypocrisy is here at it's finest. Sure, that was just a rumor, but anyways, I'm just saying.