When the offline channel business was going through the tough phase due to the deep discounting or predatory pricing offered by the online business in India, Federation of All India IT Association (FAIITA) came into being a year ago, to tackle this issue nationally. Today, FAIITA is a registered body with close to 1000 members. In last 12 months, the national level IT association has reached out to all the key state and IT federations across India. Moving forward, the association has set a target to add 30,000 IT partners as members in the next 2-3 years. Speaking exclusive to Channeltimes, Saket Kapur, General Secretary, FAIITA, shares the achievements and roadmap of the association.
CT: Could you summarize the key achievements of FAIITA since its inception?
Kapur: The FAIITA platform has been growing bigger and better. There is enthusiasm across the IT associations– be it regional, state and federations. Since the inception, we have conducted three conclaves in Delhi, Bangalore and the recent one in Mumbai. In the second conclave, we formed FAIITA as a society and elected office bearers, while in the third conclave, the primary agenda of the conclave was to hear the President’s FAIITA vision and next step forward from resolutions of Bengaluru conclave to decide on FAIITA membership, membership fee and near term Federation objectives through formation of respective functional committees. Secondary agenda comprised of reviewing the OLS predatory price issue through vendor presentations on their initiatives in wake of FAIITA advisory of December 2014. We had a brain storming session among the members on IT channel owned ecommerce portal.
CT: What has been the membership criteria and membership fee for joining FAIITA?
Kapur: Today, partners who have a monthly turnover from Rs 1 lakh to Rs 100 crore will be our members. Membership to FAIITA will be open to all State Federations with an enrollment membership fee of ₹10.000 and subsequent annual Fee of ₹5,000. Membership to FAIITA will be open to all State Associations wherever there is no existing State Federation as an Associate Member for a one-time Membership Fee of ₹5,000.00 and subsequent annual Fee of ₹2,500.00. Every state Federation will be considered as one vote at FAIITA. All Associate members together from a State will be considered as a single vote from that state. All FAIITA Members and Associate Members shall share their list of members and will facilitate their listing at the official website.
CT: In the third conclave, various committees were formed. How do these committees work in tandem, looking at the diversity of your members hailing from all the four regions
Kapur: Functional committees were formed to achieve the near term objectives. Each committee will be headed by one chairman and four members including OLS & vendor committee chaired by Karthik. S, Government Interface committee is chaired by Mahinder Agarwal, Membership and Website committee is chaired by Arun Kemar Dey and Grievance Committee is headed by Pawan Jajodia. For looking after the working of these committee, we have elected Alok Gupta as the Convener.
CT: FAIITA was formed with an objective to handle the OLS issue. After a nation-wide bandh and advisory to brand owners, what is the action taken by brand owners?
Kapur: In the III conclave, we had re-looked into the OLS issue, we had seen presentations by the Brand owners on their initiatives after issuance of FAIITA advisory in December 2014. We have sensitized the brand owners, out of all the present vendors, HP has done fairly good. Having said that, OLS issue can’t be solved overnight, it has to be a gradual process. Some of the actions taken by the brands like HP, Lenovo, Dell, Asus and Acer include:
HP actions against predatory pricing were:
1. Only authorized partners are allowed to sell through OLS and 17 key partners pan India have signed up for same.
2. Agency led tracking of online prices is in place through consequence management.
3. National Helpline for partners has been construed for IT Channel partners to escalate their concerns.
4. Unauthorized Partners are being refrained from selling online and spoling the MOP.
5. Punitive action by way of holding rebates and incentives of erring partners offering deep discount is in place.
6. Differentiated SKUs Computing Products have been introduced exclusively for OLS.
7. Differentiated SKUs for Printing Products is work in progress.
8. Severe action is being initiated against the HP counterfiet consumables and extensive RAIDs are being conducted nationwide.
9. Names of 17 partners who have signed up for OLS were shared and it was agreed that their contract terms will be shared with FAIITA.
Lenovo actions against predatory pricing were:
1.Confirmed implementation of eight initiatives based on FAIITA advisory.
2. Consequence management is yet to take off.
3. Exclusive programmes for conventional channel have been initiated.
4. Sought help from FAIITA in increasing PC penetration.
5. Confirmed action against perpetrators of predatory prices.
6. Candidly admitted contribution of OLS in offering deep discounts.
7. Lenovo’s 95% percent business is through conventional channel and only remaining 5% is through OLS.
8. Acknowledged that OLS is the new route to the market and cannot be ignored.
9. There is no role of brand owner in predatory prices of OLS
Acer actions against predatory pricing were:
1. Claimed to be least exposed to OLS predatory prices.
2. Advisory on website to buy from authorized channel.
3. Instilled confidence in conventional channel especially for
4. Initiated agreements with OLS to maintain MOP.
5. Sensitive to the woes of the channel.
6. Online is the way to move.
Asus actions against predatory pricing were:
1. Confirmed engagement with OLS on predatory pricing.
2. Introduced differentiated SKUs for online
3. Pricing issues at online have been sorted out.
4. Most of the products are no more exclusive for online and available
accross the channel.
5. Delegates raised their concern on Asus policy to first launch new
CT: Few section of partners feel that FAIITA is not looking into the interest of small partners. How justified is that?
Kapur: In FAIITA, we are very clear of one thing that, we are not going to handle any regional issue, all the regional issues will be handled by federation, association and local body. We are here to resolve national level escalations. We will step into those cases, where the state association has failed to resolve the issue. Through our grievance committee, local issues can be addressed. We recently settled HP’s backend issue of Palampur and Shimla partners. Therefore, we are looking into the smaller partners too.
CT: How are you educating members on arbitration related issues
Kapur: Being a professional arbitrator, we have come across lots of confusion for arbitration, mediation and conciliation. I would be starting a workshop on arbitration, we have to create awareness on the basic difference between mediation and conciliation, which can be a value addition for any associations. It is always good to settle any dispute with the power of three.
CT: What has been the status on partners owned e-commerce portal?
Kapur: We have been working on owning our own portal. We are considering to look into the offer made by ecommerce portal Techbazar as a new route to the market. The portal is offering us the following– Each interested e-seller will own an equity and get ownership of e-commerce portal at face value; deal assurance for online transactions; deal with certified partners thus mitigating risk of business and credit facility, protection of investment. However, we have to take an internal call on this offer. As we see there would be quite a few hitches to make it workable business proposal.
CT: Looking at the changing dynamics of distribution, in your view, what is the future of IT channel
Kapur: Seeing the current IT trends, IT channel business is all about the game of strength and competence. Elements of locations advantage is over. Service business is most important to channel.