SPC or special price clearance is an oft-used term amongst channel partners dealing with corporates. As the term suggests, SPC is the practice of procuring goods under specially discounted rates for making bulk deals to corporates under special conditions.

However, the practice of SPC has taken an ugly proportion right under the nose of most vendors. But this time, it is the vendors' own sales representative who are betraying them by misusing the loopholes in the concept. As a result, it is also spoiling the market dynamics in the channel community.

According to market sources, the sales representative of some major IT product companies like Samsung, HP, LG and its likes, have been misusing the SPC concept by joining hands with channel partners on a regular basis. The modus operandi is such that there is no way the vendor's headquarters will even get a inkling of the entire scam.

It all starts with the vendor's sales representative, who usually under pressure of completing their sales target, approach dealers to pick up stock from the company even if there is no requirement for the same.

When the dealer refuse to take the stock the sales representative offers the dealer to use the 'notorious' SPC method to their advantage.

First the dealer is asked to produce a fake enquiry of a large requirement in the name of any large corporate. This enquiry is then forwarded by
the sales representative to the headquarter requesting for a special discounted price citing competitive quotes from competing brands. The headquarters quickly clears the special price, which is usually much lower than the fake competitive price provided.

Since the sales representative is the person who is supposed to verify the authenticity of the claim, the officials at the headquarters rarely bothers to further verify the request. The dealer gets the goods at heavily discounted price, which is then floated in the market at a price much below the MOP (marketing operating price). This creates unhealthy competition among the channel community. Meanwhile, the sales representative manages to meet his target.

According to market sources, the practice is most prevalent in brands like Samsung, HP, LG and many others. A dealer who has availed of SPC using the above method said on condition of anonymity, “Such deals work out best in high-end products where the margins are very high. It is far too difficult to get such arrangements done on fast moving and lower margin products. Such deals are often initiated by the area managers of the vendor.”

Very often, high end-laser printers and large LCD monitors are the products that have moved through such means. Some of the dealers who have come to know of this scam have compared such deals equal to 'criminal' activities. “Both the dealers and the sales representative should be held responsible in this criminal act and should be severely dealt with,” said a dealer.

Many of the big dealers, involved or not in this act, are in knowledge of the SPC scam, but have remained tight-lipped about this. While most refused to talk at length on this topic all agreed to the existence of such practices.

R Manikandan, GM-Sales and Marketing (IT Products), LG Electronics confirmed the practice of giving SPC, and was aware of the irregularities done under the shadow of SPC. But he claimed that LG gives SPC in a controlled manner, and in large deals the company verifies the authenticity with the customer.

HP refused to give an official statement on the issue. Despite repeated attempts, the concerned person for corporate deals in Samsung was not available for comments citing busy schedule. This report is a warning for all those vendors, who may have become a victim of the SPC scam, to review its processes before this scam takes larger proportion.

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