Flipkart is in legal trouble as the US-based direct selling company Amway has apparently sent a notice to them for illegally selling their products on their site. They had earlier also sent a legal notice to Flipkart asking them to stop sellers from selling the products on Flipkart, but the online platform didn’t pay much heed and hence Amway chose to approach Delhi Court to seek justice.
The Case
As per the government on direct selling guidelines, without a written consent no person can sell products of a direct selling company on an e-commerce platform. The direct selling companies are liable to sell their products using word of mouth, one to one interaction, demos of their products or distribution on leaflets.
In a media statement, Amway said “it believes in conducting business ethically and is committed to helping its direct sellers succeed. Amway has sought judicial intervention in the interest of consumer safety, protection of livelihood of its direct sellers and for preserving the basic foundation of its business.”
Amway has put allegations on Flipkart for illegal selling of their products and also that the sellers have tempered with the products in a way where they have erased codes printed on lids etc. making them impossible to trace back
This is not the first time that Amway has sent a legal notice to an e-commerce platform, in the past Snapdeal and 1mg were also caught in this legal trouble and Amway got injunctions in both instances.
Earlier Incidences
Earlier, Amway had issued similar notices to e-commerce platforms 1mg and Snapdeal. Amway has already obtained injunctions in these instances.
India Direct Selling Association (IDSA) had also written to players such as Amazon India, Flipkart, Snapdeal, Shopclues and Paytm, seeking action to stop unauthorized sale of products from member companies such as Amway, Avon, Oriflame, Tupperware etc.
IDSA Concerns
As Jitendra Jagota, former Chairman of IDSA said in one of his media statements in 2017, “Direct sellers work on a very thin margin. In online, price-cutting goes beyond control. If we have a regulated system, where direct sellers sell as per the conditions of a contract, we have no problem.’
The current IDSA chairman Vivek Katoch also raised the similar issue stating that “the association is raising the issue with the stakeholders as it is directly affecting the people employed in the sector.”
One of the prime reasons for their concern is the difference in pricing. Online platforms end up offering discounts and cheaper pricing as compared to the direct seller, which then affects the direct seller’s chain. They also feel that today online medium cannot be ignored but there should be a consensus on the pricing. The heavy discount model that the e-commerce platforms today offer, become a challenge for the direct selling model. The reach online is able to garner today is far and wide, but a harmonious way needs to be found for balancing the pricing and reach.
