Famous B-school GD topic.
India has 470 million internet users with over 64% seeking to shop from the comfort of their homes aka online shopping. Although infiltration of e-commerce in India is low as compared to the markets in USA and UK but its flourishing at a faster rate with large number of new players. Due to the increase in buyer penetration to 18% as of 2020 in India, the market has crossed USD 28 billion.
Some of the prominent names in the Indian e-commerce Industry are Flipkart, Jabong, Myntra, Snapdeal, Amazon, eBay, Homeshop18, Tradus etc. One of the most effective and customary strategies for an e-commerce to drum up business is to offer discounts. They sometimes offer discounts over and above their usual percentage to clear their piled up stock and sometimes during festivals to attract customers. Discounts offered are healthy for market practices has become a debatable topic. Many find the discounts harmful as they are offered on slow moving, perishable, long time inventory holdings. Loss due to discounts are born by sellers as after such heavy discounts only a meagre margin is left to sustain competition. Discounts also kill good products as consumers get addicted to these discounted online products and choose them without realizing their loss on a good product.
Discounts are made to look beneficial and enticing however are harmful in the long run. Recently, most e-commerce companies have adopted unrealistic pricing to attract a large customer base, which is definitely upsetting the sale of the retailers who are investing and not meeting sales target. To name a few Amazon and Flipkart, the e-commerce giants offer these unrealistically large discounts and claim the business of Rs.600-700 crores in a single day. Snapdeal also announces something on the similar lines. These unrealistic offers attract large masses and thus contribute in the revenue generation of the companies. These are also eating up the cash flow from the Indian physical market.
The Indian economy is presently running on these physical markets rather than e-commerce as of in USA and UK. Even after this enormous growth of e-commerce in India, 95% of business is still generated by offline retailers. Now this “strategy” not only affects small retailers but also impedes the growth of Indian economy. This also hampers the brand name and brand image of the products in the customer’s eyes. Since the e-tailing companies are using the unrealistic pricing strategy many of the brands have decided to be away from the e-commerce companies. The issue that arises is the warranty and the guarantee on the purchase of the electronics goods through e-tailing.
Alternatives to predictable discounting:
Focus on value associated benefits with profitable actions
Free shipping
Free gifts
Loyalty programs
Discounting can be a powerful term temporarily however this shouldn’t be your marketing strategy in the long run. There ought to be the growth of e-commerce sector in India as the technology expansion is high, however, this should be done in the umbrella of norms and regulations. A controlled e-commerce market strategy will turn out to be a boon to the Indian economy whereas an uncontrolled can run berserk and will prove to be a bane that will hamper the growth of the country.
“So make it an add to cart kinda day but cautiously.”
This is so well written, very informative.