When the brands did not pay heed to the demands of offline sellers even after repeated requests, the resellers association Punjab Association of Computer Traders (PACT) protested in Punjab. The brands have asked for a week to give their decision. On the other hand, the resellers have also decided that they will not take new billing until the brands decide in their favour.
To address the significant price disparity between online and offline computers, the Punjab Association of Computer Traders has gone on strike, calling upon the brands to rectify the imbalance. They have announced that if the disparity is not addressed, they will not take up the orders for the product slot designated for the much-awaited Diwali sales. The association members, along with the dealers present, called for action from the brands to ensure fair opportunities for growth within the retail business.
To listen to the grievances of the retail sellers, the local representatives from the brands and dealers including ACER India Pvt. Ltd., HP India, Brother International, ASUS India Pvt. Ltd., ASUS India Pvt. Ltd., Dell Technologies, Dell Technologies, Lenovo, BenQ India, Savex, Acro Engg, Co., Supertron Electronics, Rashi Peripherals Ltd., Savex Technologies, VRP Telemetics Pvt. Ltd.
"Gurpreet Singh Sunny, Chairman of PACT, has issued a letter to all dealers advising them not to process the billing of laptops or desktops from any vendor until a solution is provided for the price disparity. He has also warned that any member found acting against this advisory will face action from PACT."
The lower shipping costs involved in the direct import of goods from manufacturers, along with reduced marketing expenses due to the migration of promotions to digital media, enable online sellers to achieve cost-effectiveness and offer competitive pricing. This allows them to sell computers at lower prices than offline dealers. Additionally, collaborations with banks provide extra bank offers on credit card purchases, contributing significantly to additional discounts on digital products.
On the other hand, offline dealers have to go through a higher input cost due to the supply-chain system and the inaccessibility of bank offers. This does not allow them to offer discounts like online sellers, leading to price disparity. Here are the pain points of the retailers as per the PACT memorandum:
1. Addressing Price Disparities for Brick-and-Mortar Vendors – Due to the significant price disparity retailers see no growth forward in the business. Hence, “to ensure their survival, vendors need to provide support of price difference that addresses this gap. Dealers are ready for physical stock verification but support has to be given in the form of credit note or free billings and not as an adjustment in next billing.”
2. Streamlining Dealer Incentive Practices – Given online platforms where transactions are straightforward and upfront highly contrasts with the “challenging cycle of activation and sell-out reporting.” Resellers want this issue to be addressed immediately. Also, “vendors should take physical stock from the dealer and issue credit notes as the appropriate form of price support,” to grant “price support during price drops.”
3. Unfair Incentive Practices – To deal with the pressure of incentives based on sell-out and sell-in metrics, resellers are demanding that “Any back-end payments or incentives should be settled solely on the materials already purchased, without tying them to future purchases. This practice must change to ensure fair and transparent business dealings.”
4. Bridging the Gap of Swipe Charges for Dealers – Currently, the swipe charges of 2% for credit card transactions do not apply on online platforms in the name of bank policies. “To create price parity, vendors should take the initiative to act as a bridge between banks and dealers, advocating for a waiver of these charges.”
5. Linearity Billing Challenges for Dealers – For October, dealers were unable to make linearity billing due to excess stock. To prevent financial losses for partners, vendors must take proactive measures to support them during this challenging time, ensuring that neither distributors nor dealers suffer losses.
6. Price Disruption and Inventory Challenges - Given the current price disruptions, they also demanded vendors treat October as a target-free month/quarter. Additionally, “back-end payments and incentives should be settled on a pro-rata basis to reflect the unique challenges faced by dealers at this time.”
7. Supporting Dealers Through Inventory Challenges – Due to the price disparity, dealers are facing “significant inventory” and “low customer fall.” To address this issue dealers are demanding price parity, for which, “vendors should offer at least 30 to 60 days of interest-free credit support.” Otherwise, they want “the option to return the material, with incentives settled based on their purchase billing for the respective month on a pro-rata basis.”
8. Ensuring Fair Billing Practices for Dealers – As online dealers are not required to purchase or sell expensive bangs alongside computers, “dealers should likewise have the choice to bill laptops with or without bags or single product.”
9. Ensuring Ethical Practices in Distributor Appointments – The dealers are also demanding, in case of appointing distributors, “Vendors must ensure that they obtain a No Objection Certificate (NOC) from the old distributor by settling all outstanding claims and facilitating the liquidation of any stuck inventory before appointing new distributors.”
10. Establishing Single Point of Contact for Effective Communication – To establish a smooth communication flow, “All vendors should designate a single point of contact for PACT to streamline communication regarding any issues faced by our members. Providing the contact details of this representative will ensure that proper dialogue can be initiated, facilitating timely and effective solutions.”
Concluding the meeting, the brands and the dealers have agreed to take one week to come up with a midway to come up with a solution. Meanwhile, the Punjab Association of Computer Traders will halt all billing with the computer brands. Fresh billing will only resume if the brands provide a favourable decision for offline sellers. However, the dealers will continue clearing their current inventory. Both parties are looking forward to coming to a decision amicable for offline dealers as well as brands.
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