The next time you buy a laptop or a camera online, you'll need to do more than just check the price and the specifications. Make sure you read all the fine print as well, to make sure that you're buying a product covered by warranty. In a bid to combat grey market sellers who undercut the prices of products that come through proper distribution channels in India, many manufacturers are taking harsh steps against online stores.
On February 19, Lenovo warned users that Amazon, Snapdeal and Flipkart are not authorised resellers of the Chinese manufacturer's products, and also issued an advisory with a list of all authorised stores and genuine partners. "E-commerce websites like Snapdeal, Flipkart and Amazon India are not authorised Lenovo resellers. We encourage you to check your warranty entitlements when you buy from these websites," Lenovo said in the advisory on its website.
Snapdeal said it takes "utmost care" to list products only by those sellers who have the necessary authorisation to sell these products." Customers can rest assured that all the products including Lenovo and Toshiba products which are available on Snapdeal.com are genuine and eligible for warranty," a Snapdeal spokesperson said.
Nikon might have been the first brand to take up this issue though - in a blog post in September last year, the company stated: "Please note that Flipkart (Flipkart Internet Private Limited) and Snapdeal (Jasper Infotech Private Limited) are not our authorised partner/dealer in India for Nikon Products." Toshiba has also issued a similar statement, and now, so has Canon. Canon has stated that they will give incentives to people who buy their cameras offline, such as a 15-month warranty in lieu of the more standard 12-month warranty that will be given to people who buy their products online.
A growing ecosystem
A Flipkart spokesman said the site connects thousands of sellers across India to millions of buyers and helps the traders scale their business at a fraction of the selling cost. "In a lot of cases, these small retailers have seen a month-on-month growth of 40 percent in their business after listing on our marketplace."
According to an Amazon spokesperson, "Amazon.in is a marketplace platform that enables Indian merchants to sell products to customers across India. Merchants on Amazon.in independently decide price of their products. Amazon.in assures that its merchants list genuine products with manufacturer warranty. This applies to all brands. Amazon.in also extends A to Z guarantee on all products offered by its merchants. Customers of Amazon.in enjoy 100% purchase protection on products bought under the A to Z guarantee."
They also pointed out that there are in fact authorised sellers for brands such as Canon who are present on the Amazon.in website, and if you buy a product from these sellers you get the full scope of benefits. Despite that though, the overall message for online stores still seems to be buyer beware, as the marketplace model puts the site itself at one stage of remove from the actual products.
However, while online markets are growing quickly, offline sales still account for the overwhelming majority of hardware sold in India. Companies come under pressure from their offline channels, which still account for the bulk of most companies' profits. The low prices on websites can affect not just the company's own online stores, but also their retail partnerships, and in a country like India where many people still buy a product based on the advice they get in-store, it can be a major concern for brands, who want to keep all their partners happy.
At a press meet in Chennai this Tuesday, representatives of the Confederation of I.T Associations (which represents over 1,500 computer hardware and gadget vendors) threatened a boycott of all larger vendors who allowed the online discounting to take place, The Hindu reports.
Can the companies do this?
No manufacturer wants to leave the online channel completely - it's a huge source of income for everyone, and it makes no sense to drop it altogether. There is no denying however, that massive undercutting of their rates can dilute the value of the company's online presence. In such a scenario they can enter into agreements with the e-commerce sites to maintain a price level, and to enforce this they can apply different incentives and disincentives. This is because the warranty is seen as a separate contract that the buyer and the manufacturer enter into. This is different from markets like the EU, for example, which has laws providing a statutory warranty.
Delhi-based lawyer Apar Gupta explains, "There is no legal restriction of a minimum price - if a seller wants to make a product available at a loss, that is up to them. Lenovo is taking the only legal position available to them, which is to take away the complimentary one year warranty support customers expect. However, in the long term, this could backfire as the ultimate effect will only be felt by customers when they face a technical problem and are more likely to blame Lenovo as opposed to Flipkart." In Canon's case an incentive system, rather than the Lenovo's penalty system may even justify the higher cost of the same product, Gupta added, and said that it might make sense to the consumer.
Ketan Patel, Director, PC Category for HP India spoke to NDTV Gadgets on the matter, and said, "The online channel is of course a very important piece of the pie in India, and it's very important to build good engagement. At HP, we work with a number of different portals to ensure that we have a good presence online."
Part of this, Patel points out, is to have agreements with the sellers which ensure what he calls "channel hygiene". In an open online marketplace, price undercutting can negatively affect the brand and dilute the value of the product, and to resolve this, Patel explains, it's important to be selective about the online portals you are present on, and to have "a well thought out set of terms and conditions, so that end consumers don't suffer."
Should there be a mandatory warranty?
As a point of law, the companies aren't doing anything wrong. However, when consumers buy an expensive phone only to find that it isn't covered under an India warranty, there is only one loser in the whole deal. Some companies, like Apple, follow a policy of global warranties for genuine products. While the iPhone isn't covered, and Infibeam is the only authorised online seller in India, you can get an iPod or iPad from anywhere, and be covered under the warranty. Flipkart is the only authorised seller for those two products, but Apple will service any genuine iPod or iPad regardless of whom you've purchased it from.
In other parts of the world, there are statutory warranties in place, which require all manufacturer's to provide a minimum of service on any legally purchased product. Here though, online is being equated with the grey market, and instead of increasing customer convenience, it's another thing we need to perform due diligence over, before making a purchase.