After prudently considering the favourable response received from HP with reference to submitted Memorandum, the president and governing body of FAIITA unanimously agrees to revoke the purchase deferment of HP products with immediate effect. All members and State associations and federations were advised to further intimate their members to resume normal business with HP first.
Notably purchase deferment of other brands continues as per last advisory till a favourable response is negotiated, Discussions with other brands is under progress after the meeting which was held in Mumbai. On the day of meeting the brands gave us assurance to support the channel community and HP is the first brand to respond fast with all the points mentioned clearly without any confusion. said, Saket Kapur, General Secretary, FAIITA.
Based on the previous communications and discussions with FAIITA team, HP has sent a point wise reply and we are happy to see things positive. I am sure in course of time other brands will definitely reply to our memorandum positively which will be a great help to the complete channel community. We, As FAIITA are only concerned about our channel friends, they should never suffer as they put lot of efforts to build the brands market. We will always be with them anytime, said, Champak Raj Gurjaar, President, FAIITA.
In South India, mostly all the state and regional associations supported FAIITA, and where there is unity, always there is success. If brands understand the problem of channel community and do the necessary changes then its win win situation to all of us, said, Deepak Bommisetty, Regional Jt. Secy South, FAIITA
Memorandum of FAIITA given to all the brands in Mumbai Meeting:
As an owner of a brand and your engagement with contractually committed B&M business partners; it is your prime responsibility to provide positive and healthy business environment to your business partners. After lengthy discussions with FAIITA members, having substantial business stakes in retail, it is unanimously felt that there is a dire need to create and maintain level playing field across GTMs’ to ensure market hygiene for business sustenance & growth of B&M business partners, furthermore it is imperative to discuss, agree and implement the following:
- There is a market need of one Nation and nearly one Price of your product range to obviate customer confusion on correct time, price and place to buy.
- Contractually B&M partners should be able to match visibly most competitive price of your products, moreover the brand owner/OEM ensure seamless earning of a minimum sustenance business margin of 5% across entire product range.
- During Sales Promotion period at online portals (or any other such promotional disruptive price fair), there will be a similar sale at B&M partners with similar pricing fully supported by Brand Owners, ensuring a minimum 5% Margin across entire product range.
- Brand Owners/OEMs shall inform all registered B&M partners at least two weeks in advance; about likelihood of Sales Promotion activity by OLS, and advise partners to inform all footfall customers about it and stock products that will sell during OLS sales, to be in sync with online.
- The brand owner shall also endeavour to augment the business in the offline channels during such discount periods proportionately to the surge in online sales of its products and provide special visibility through various marketing campaigns as per respective brand promotion strategies.
- During sale period, products in stock of B&M partners of nearly similar specifications and configurations as being promoted by OLS will be treatedas same and Partners shall be allowed to earn a minimum 5% sustenance margin on sale of these products during promotional period.
- A partner agreed Price differential matrix of Product Configuration/Specifications will be submitted by Brand Owner for arriving at stack price of various configurations of products, keeping in mind a minimum of 5% sustenance margin.
- All the price parity compensatory claims to be settled by Brand Owners within one week.
- Targets in post disruptive periods to all B&M partners shall be assigned on basis the actual sell out achieved by B&M partners and not construed to push inventory to them.
- In the event of termination of partner agreement, it shall be responsibility of brand owner to clear within reasonable time, the unsold inventories of the terminated partner.
- During price disruption happened last festive sale our members are piled up with huge stocks for which viable solution is required from vendors so that there loses are covered and there stocks are liquidated.
- As a matter of fact our Members are liable to pay overdue interest on all outstanding to your Distributors consequently ad idem interest is justifiably payable by you to them towards overdue incentives/backends claimed.
You are requested to confirm the above points in order to allow B&M partners to perform healthy and growth oriented businesses and remain in sync with the growth strategy of the brand.
Reply from HP on the memorandum:
HP, as a rule, endeavors to discourage price disruption over online e-commerce platforms including but not limited to Amazon, Flipkart, Paytm and LRFs to achieve One Nation One Price 365 days;
Only as an exception, said disruption may happen but HP endeavors to immediately control it;
In the intervening period of disruption if a customer happens to walk in to the showroom of HP contracted/certified partner, he/she will be immediately offered the net effective disruptive price to successfully effect the sale, with the understanding that HP will support contracted T2 partners and HP certified T3 partners(T3 certification process is already available with contracted T2 partners) with appropriate sales out programs equal to difference between SRP and net effective disruptive price, that will be routed through the contracted T2 partners subject to purchase verification and end user verification. A detailed process note for end user verification and purchase verification will be communicated to HP partners soon;
Point No.1,2,3 of FAIITA Memorandum have been covered in Point Nos.1,2,3 of this document
Point No.4 of the FAIITA Memorandum is Agreed as follows by HP : As and when we come to know about such online sale, we would inform the contracted retail partners about the same. This will help our contracted retail partners to stock optimally for those SKUs/products. Our endeavor is to make sure that there is no disruption;
Point No.5 of the FAIITA Memorandum is Agreed as follows by HP :HP believes in driving 360 degree marketing campaigns such as print ads, OOH, Radio, Search & Digital for our contracted retail partners. We have always done it in the past and will continue to invest in marketing in future. We also undertake channel activations to promote HP’s consumer festive offers through B&M contracted retail partners. We also deploy In-Store-Promoters to promote and help our B&M contracted retail partners to increase sales. Through our trade marketing we make huge investments to make such offers more visible to the end customers, thereby driving footfalls and conversions for HP’s contracted retail stores;
Point No.6 of the FAIITA Memorandum is Agreed as follows by HP:HP will enable the end customer to get the same effective price in all contracted retail channels. The effective price will take into consideration the specification, platform, sub-brand of HP. We will be simultaneously taking corrective action immediately upon the discovery of disruptive prices. With this, partner incentives and rebates for the contracted retail partners remains intact;
Point No.7 of the FAIITA Memorandum is Agreed as follows by HP: HP will share the stack price of configurations with contracted retail partners as and when required;
Point No.8 of the FAIITA Memorandum is Agreed as follows by HP:This will not be required as we will be creating end customer price parity for our contracted retail partners;
Point No.9 of the FAIITA Memorandum is Agreed as follows by HP: HP always provides target guidance in view of the potential of sales out. No target of HP is structured with the intent to push extra inventory;
Point No.10 of the FAIITA Memorandum is Agreed as follows by HP: HP makes sure that transition of outgoing partner is managed without any disruption. The unsold stocks of outgoing partner are taken over by the new or existing partner;
Point No.11 of the FAIITA Memorandum is Agreed as follows by HP:
(A) If any HP contracted partner feels they are laden with excess stocks purchased after 25th September’18 till 15th October’18 and is not confident of selling the stocks bought by them from T1 partners, we request them to contact their HP RSM/ZM to explore a one-time stock reversal approval.
Extended Payment period proposal: We propose that the payment period to the tier 1 distributors of the unsold stocks of the impacted SKUs (AMD based products and HP 15 i3) purchased by contracted retail partners after 25th September’18 till 15th October’18 is extended till 15th December’18 without charging interest on the delayed payment period.
(B) Contracted Retail Partners willing to avail this benefit may contact the HP team for getting their stock audit.
The unsold stock will be ascertained subject to the stock audit by HP
The interest waiver on the delayed payment will be subject to clearing the 100% payment outstanding due to the Tier 1 distributors by 15th December’18.
We are in discussions with Tier 1 distributors to work out the modalities of this proposal.
Point No.12 of the FAIITA Memorandum is Agreed as follows by HP: HP’s process to pay partner rebate pay-out is acknowledged as best in class and is as per the below confirmed timelines to our contracted retail partners. Please find below the process:
Rebate pay-out is communicated to the partners within 45 days of the closure of the program.
Partners then raise the tax invoice to that affect.
Post receiving partners tax invoice, payment is released within 10 days.
With the above points, HP once again reiterates its stance of treating the business of contracted retail partners with utmost importance and that it would continue to work with all its contracted retail partners with this view, for which it has always been acknowledged for.