GOQii Technologies, a company selling smart wearables and fitness brands, is on the verge of suing Indian ecommerce major Flipkart (owned by Walmart) for selling its products on the platform at prices far below what was agreed upon between the two companies.
According to an Economic Times report, a legal notice has already been sent by GOQii Technologies to Flipkart on the issue. The company says it had warned Flipkart on several occasions that it was a breach of the understanding, but Flipkart ignored and continued selling the products at deep discounts. GOQii Technologies goes on to accuse Flipkart of violating the FDI policy too.
GOQii Technologies has approached the Department for Promotion of Industry and Internal Trade and the Competition Commission of India, in addition to complain about the unfair trade practice being indulged in by Flipkart.
GOQii Technologies says Flipkart started offering their products at highly discounted prices in the first week of May and have continued since. The agreement that the two companies have allows for such actions only if the two agreed. In some cases, products are being sold at prices below the cost price, GOQii Technologies alleges. The discounts offered are as high as 70% to 80%.
GOQii Technologies is basically a startup and has to watch its numbers all the time. Moreover, it supplies the same products to institutional customers like corporates and after Flipkart started selling its products at such low prices, some customers have cancelled their orders, putting GOQii Technologies at a heavy loss. Interestingly, GOQii Technologies claims it does not have any such problem with Flipkart’s rival Amazon.
The significance of this issue can be understood by the fact that GOQii Technologies ranks second among the fitness brands being sold in the Indian market. They have Chinese giant Huawei above them and the homegrown Titan brand is the third ranked behind GOQii Technologies.
If Flipkart does not provide a satisfactory response to the legal notice and stop the deep discounts, then GOQii Technologies is likely to haul it to court.