E-commerce Agitations: Why this Kolaveri Di?

The agitation by channel partners against predatory pricing strategies of e-commerce sites is not just gaining momentum but entering a crucial stage in various parts of the country. In trying to sort out some of the contentious issues, especially forcing the OEMs/vendors to take a stance, threats of bandhs and strikes are being bandied around. Though, true to keeping open all channels of negotiations, the dates of these bandhs are constantly getting rescheduled.

While in principle I agree that it is a serious issue and some of the actions taken by partners are definitely merited, in some aspects I feel that things are blown out of proportions and many of these activities might lead to nothing. And before many of the partners start castigating me, let me make myself clear that my experience in dealing with various stakeholders of the IT industry (vendors, partners and government officials) that gives rise to this feeling.

Firstly, and again at the expense of facing the angry wrath of many, I sincerely doubt the unity of channel partners and channel associations. When even partners belonging to one association in one particular city work at cross-purposes for their own business benefits at the detriment of overall city’s IT health, what chances are there of multiple associations from so many different regions of this vast country with their different market dynamics will remain united? There are every possibility that even vendors or e-commerce sites the selves can play up certain associations to ruin any chances of a united forum succeeding.

Second, in many cases I sincerely doubt whether all partners who are shouting hoarse against online retailers and their pricing shenanigans, are themselves not willing partners themselves? For obvious reasons, I cannot take names, but let me say with responsibility that one prominent partner heading one of the agitating associations is himself one of the biggest suppliers for Snapdeal. One can obviously believe that this talks of business laissez-faire, but does not this in any little sense also smack of hypocrisy?

Third, I genuinely doubt the extent of the damage that is expected. For one, online retail sites primarily impacts only the partners dealing in consumer channel.  While consumer channel would account for nearly 40% of overall channel revenues, how many partners are there who solely depend on them and not delve in the enterprise channel front in any way? Also, it is primarily laptops, tablets and mobiles that are under theat—products that have got so much commoditized so long back that there are hardl any margins on them. Partners anyway were depending on solutions and services—and these are not under threat as e-commerce sites do not offer them.

Fourth, while e-commerce sites, in some cases, are indulging in predatory pricing, anyone with a bit of business common sense can see that things are soon bound to get rationalized. The big sugar daddies currently funding these e-commerce sites now and allowing them to absorb humongous losses will not dole out the moolah much longer; then most online retailers will follow fiscal prudence and pricng discipline. Besides, as the industry matures there are bound to be government regulations and more instances of corporate governance to stop financial irregularities.

I can list out ten more reasons in support of my contention, though even I would agree that one good thing that might just come out is the formation of a national association for channel partners. A sort of like a Nasscom for IT channel.  However, loose or contradictory might such a federation be initially, there are bound to be different issues where they can bring partners from across the country on a common front. But whether planning for vendor boycotts on e-commerce stand is one such issue, I have a great doubt. In fact, with the global consumer trend of going online, I feel that the writing is on the wall and fighting against it is same as Don Quixote fighting the invisible windmills.

Borrowing the lines that became such a rage a few years back, my question to agitating partners is “Why this Kolaver, Kolaveri Di?”

Rajneesh De

(rajneeshd@cybermedia.co.in)