Last week, CEO of gizmobaba, Alok Chawla spoke to us about the issue of brand infringement on Amazon India. Despite alerts from them, the etailer apparently turns a blind eye to other sellers who are clearly copying the brand and selling products in their name.
This week, Alok shares more on their battle against counterfeit goods and his thoughts on the marketplace-seller equation.
What is your take on such unethical sellers? How should marketplaces control these people? What measures should be put in place?
If there is a successful brand, there will always be imitations. It is impossible to stop fakes. Large international brands have not been able to do so. The lure of easy money always exists, and the easiest way is to pass of your cheap quality goods as the reputed brand of another at a higher price.
However, the marketplaces should take responsibility to ensure that such unscrupulous sellers do not misuse their platforms to make a fast buck, and in the process, hurt the reputation of the marketplace itself. When intimated, the sellers should be immediately sent an alert, asking them for authentication documents in a fair timeline, say 1 business day, failing which their listings should be suspended.
Unfortunately, we do not see this happening in the short term, as these small unscrupulous sellers form a huge percentage of the business on the marketplaces. By doing so, the marketplaces would have to take a temporary hit on sales. In the heady days of GMV growth, the marketplaces have not done any kind of quality check on the sellers. They had number targets on signing up merchants, so anyone was welcome to sign up.
And now with the new law that does not allow a single merchant on marketplaces to have more than 25% sales, the race to sign up more merchants will only get more intense. So the quality of sellers is only expected to get worse. We expect the problem of fakes online to get worse. Amazon in its race to get to the top is not going to delete any listings or sellers anytime soon.
In the whole marketplace-seller equation, what is the immediate change required?
What is immediately required is that the marketplaces should stop arm twisting sellers with their policies, and let sellers form their own return and warranty policies.
The new law provides for this, but no marketplace is following it. Returns for customer remorse continue to get authorized. Buyers know how to misuse these policies well, and sellers are now realizing that the dream to “build an online business on marketplaces and grow rich” is just that….a dream.
Did you get disheartened about online selling when this happened? Has your opinion about online retail changed?
We are not disheartened at all. Imitation is the best form of flattery. The availability of our brand fakes is actually a barometer of our success! We are fortunate to have over 95% of business coming from our own site, so it is very easy for us to educate our customers to beware of the fakes. But for sellers whose primary sales come from marketplaces, this could be a substantial challenge.
Do you take any special measures to retain customers and get repeat orders?
We have the friendliest policies compared to other brands selling online.
Products have an unconditional 3 or 6 month replacement warranty.
We follow value-for-money concept, so all products are of top quality at affordable prices.
We don’t take the discount route as we feel it affects quality in time.
But regular customers get exclusive coupons and discounts on new product launches.
Over 30% of our business comes from repeat customers.
What is the worst aspect/feature from a seller’s point of view of the below?
Poor adherence to trademarks, impossible to differentiate fakes from originals. No seller support escalation matrix.
One sided returns policy. Products used and returned for the flimsiest of returns and accepted without even allowing seller to dispute. For eg. customer will use a product for a few days, and drop it and break it. And he will return it with reason “defective”. Flipkart will accept the return without any verification and debit the seller. All such returns are still charged fees and penalties to sellers.
Snapdeal is moving to become a kind of flea market for cheap grey market products. They have even started signing up sellers without requiring a VAT registration on their new platform, Shopo. In the guise of peer to peer selling, they are actually signing up the grey market sellers, just like eBay. They are also known for their overcharging on shipping and unfair penalties.
Who will dominate Indian online retail by the end of this year? Why?
Though Amazon is the worst in terms of ensuring that products sold on their platform are originals, it appears they will emerge leaders in the short term, albeit due to all the wrong reasons.
- Flipkart and Snapdeal are running out of money and their ability to compete on various fronts comes down. Amazon does not need an investor to back them; it is funded from its own U.S. entity, and will be able to outspend the competition in the short term.
- Amazon not taking action on unscrupulous sellers will ensure that more and more unscrupulous sellers sign up at Amazon, giving their sales numbers a boost in the short term. Once Amazon achieves a clear leadership position, it will possibly start pruning these sellers slowly, to ensure that it retains its leadership, while making a show to the public that they are taking action against such sellers. Such a strategy was adopted by Alibaba and was quite successful.
- What little harm to its reputation is done by buyers who end up with fakes, is being more than compensated by an ad campaign that claims that Amazon sells only originals. All affected sellers now know that this claim is a cock and bull story made to eyewash unsuspecting customers.
Till there is a concrete solution to the issue of brand infringement, looks like Amazon gets to maintain its ecommerce mammoth status. How about taking some action Amazon, to score points with the annoyed sellers?