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How Fake Products Can Kill The E-commerce Boom
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There are no free lunches. This logic works in the online marketplaces as well. French luxury brand Gucci’s decision to sue world’s largest online retailer Alibaba for selling counterfeit products on its website, is a pointer to the real story behind the online retail boom, which sometimes is unreal.
The fact is people buy online to get super discounts and it is here that they get duped. There are hundreds of complaints registered with online retailers all over the world for selling counterfeit products to customers.
While the Alibaba case is making headlines in the international market, the Indian market itself is full of such cases.
Take for example the case of Gizmobaba, an online retailer of electronic gadgets. In 2014, the company found that at Snapdeal.com some seller were selling inferior quality goods, under the Gizmobaba brand.
The company’s founder and chief executive officer Alok Chawla kept on raising the issue with Snapdeal’s seller’s support desk for three to four months but nobody listened. It was only when Chawla reached out to the top management with the help of his contacts that the problem was resolved.
Chawla feels that only people with contacts are able to get their problems addressed. Small dealers have no platform to be heard.
Companies like Chumbak and Sahil International have also spoken in the past about the issue of counterfeit products being sold by Indian online retailers. Be it Flipkart, Ebay or Amazon, almost all of them have been accused of allowing counterfeit products to be traded on their market platform.
Online retailers get away because of the loopholes in the laws that deal with online retailing. Online retailers like Alibaba, Flipkart and Snapdeal are recognised as the marketplaces for selling stuff online by manufacturers. This definition gives them immunity from facing criminal charges most of the times.
However, cases like Alibaba bring out the fact that products sold online at dirt cheap prices have the risk of being counterfeit. It is impossible to sell the original product at 20-30 per cent discount throughout the year. While it is understandable that the e-tailers save the operational cost of running brick and mortar stores, but those savings are not enough to allow a company to have sale season throughout the year. There is hardly a week when you would not find a sale on products at an online platform. Compare this with the offline retailers who just have end of season sales.
While the party for the e-tailers will last for some more time, but as the customers become more aware about the counterfeit products, they will start preferring the brick and mortar stores over the virtual market places. And this is where the brick and mortar retailers will have a chance to make a comeback. My personal experience with online apparel retailers has not been very good, as every time I have ordered a product, on delivery the quality and colour of the product has been inferior to the one displayed online. This is why I have stopped shopping apparels online and am rather happy visiting the high streets or the malls of Delhi to touch and feel the texture of the cloth that I want to wear.
My experience of buying mobile phones has also taught me that in an apple to apple comparison, offline gadget retailers like HOT or Croma manage to give competitive prices for all the products. While it will take some time before other customers realize this, but in the age of information e-tailers do not seem to have much time if they want to survive in the business.
In 2005, nobody thought that brick and mortar retailers will enter a dark tunnel within three years of glory. The e-tailers should make no mistake and focus on cleaning their system before losing the customers that they earned by burning the cash of investors in monthly flash sales.