It looks like not all love stories have a happy ending. The very high profile partnership between online marketplace Amazon and famous brand Future Group is likely to end. The bone of contention appears to be the sharing of the burden that arises due to the discounting strategy of etailers.
Those familiar with the issue have stated that Amazon wants Future group to contribute to the discounts on the latter’s products on sale in Amazon. However, Future group’s founder and CEO Kishore Biyani has not taken this very well owing to multiple reasons. It will not be fair of Future group to sell its products at different rates online and offline.
How it all began
In October 2014, Future group and Amazon entered into an exclusive deal. The two companies would create products jointly, that would be sold on Amazon’ online and Future’s offline stores. At the time, it seemed like a good deal where both parties could bring down their competition.
Biyani had said, “Partnership with Amazon, which obsesses to be earth’s most customer-centric company, will enable us to leverage their strengths, investments and innovations in technology to reach out to a wider set of consumers across India.”
Amazon group’s venture Cloudtail (a joint venture between Amazon Asia and Catamaran), was purchasing products from Future’s private labels including Jealous 21, Scullers, and Indigo Nation. These products were then sold at discounts of 30 to 40%. The problem arose when Amazon wanted Future to contribute a share of the discounts.
What went wrong?
However, it looks like things have soured. The two parties ought to have discussed everything, including discounts, feels Harminder Sahni of Wazir Advisors.
“What priority pricing Future will give to Amazon, what price differentiation will work between offline and online should be the first things to be discussed,” said Sahni.
It looks like a healthy relationship between online and offline retailers is a mirage. The two seem to be working on different principles that can never be reconciled. However, one must continue to have hope that the future might hold a different picture.
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