With big-ticket sales walking into the Indian online marketplace, desi consumers feel they are in their platinum phase. The offers look irresistible — a Samsung tablet priced at Rs16,500 coming for merely Rs1,450 and a Sony Bravia lED TV worth Rs95,000 going for just Rs29,900! But herein lies the big sale’s big catch. DEEBASHREE MOHANTY speaks with top players to understand the dynamics of these newage shelf splashes
Flat 50% off if you shop between 3pm-5pm; 60+25% off on select merchandise; 20% flat off on diapers and toys; Midnight sale — flat 35% off on everything on the website! An additional 15 % discount if you shop for over Rs1,999. Sale banners on e-commerce ventures are becoming bigger, better and more audacious by the day. No longer is the flat per cent discounting a crowd puller. Today is the time for that ‘big extra’ which lures a customer to a particular marketplace. Sale-wise, there is stiff competition among big Internet players. Off-air, the retailers are also beaming with excitement. On the corporate front, big product business houses are in their happy space. But the beam is only on one segment — the consumer.
Sample this: Abhinav Singh from Greater Kailash bought a 36-inch flat screen lCD TV for just Rs11,999 last week. There is an ACER tablet up for grabs for Rs2,500 only. A 20-inch lCD was being sold for Rs6,999 on a popular website that has just forayed into the Indian space. “The sales have become madder day by day. It’s become routine for people to spend at least three hours scouting for mega discounts online. It’s crazy out there,” says Singh who now spends most of his pocket money buying sale-stuff online.
Experts say, this discount season started early 2014 and has caught on like wildfire since then. “Website activities have boomed. In the beginning of 2014, there were only a handful of players announcing regular sales of their off-season merchandises, but towards May-June, the deals and discounts went over the roof. Some were too good to look true. The traction on sites increased by 30%, sales figures of old timers have gone up by 12% and newcomers have seen a grand reception,” Abhijeet Dhar, an ecommerce finance analyst from Delhi, says.
He adds that apart from marketplace owners and founders, vendors are also reaping the benefits of a well-planned sales strategy. And if the customer is satisfied with the product and has had a happy user experience, he is not complaining.
“There’s a paradigm shift in the way India is shopping today. More and more people are buying and trying out things online. So, for retail outfits like us, it has become must to have an online presence and tie up with popular websites to boost our sales. We are happy to extend good discounts on off-season products and slow moving items over the Internet,” Pranab Sarkar, head of sales for one of India’s leading footwear retail outlet, says.
He explains that while it may appear to be a massive discount to the customer, the vendor still manages to retain the original profit margin. “Since the cost reduces drastically, we have the liberty to offer a bigger deal online. There may be a price variation between what we sell in our outlet and what’s being sold online but in actual terms it isn’t much,” Sarkar explains.
So, how does the vendor or seller choose the marketplace where he wants to park his productsIJ “It is not easy. It has to be an established and trusted player with sound operations, logistics and technology back-up teams,” Sarkar, whose brands have tied up with Snapdeal and Jabong among other players, explains.
If we talk about online partners, big ticket sales like the one which Flipkart unleashed just the other day, is a win-win proposition for sellers and consumers. “The sales model works on the capability of clearing bulk merchandise in a very short duration. Vendor partners land up selling big bulks and customers enjoy great discounts. The merchandise is either slow moving or surplus stocks held by traders/retailers which they don’t mind selling on big discounts.
“FashionAndYou has partnership with more than 1,500 suppliers selling their merchandise through this model on our platform, but we don’t sell anything under the cost. We may be the few ones working on positive contribution margins,” Aasheesh Mediratta, CEO, fashionandyou.com, says. The portal is the pioneer of flash sales model in India and has been offering ‘great discounts’ for more than four years now.
Some online players tell you that the hefty discounts is not just a marketing and promotional campaign done for acquiring new customers. It is also introduced to make existing users happy and competition minimal.
“In the Indian space, we see discount as mode of happiness and victory. In some cases, discount is perceived as a mark of respect. That is why we as consumers, always ask for a discount — even at a vegetable shop and if we get even Rs1 off, we feel special. From a customer’s point of view, flash sales make a lot of sense,” Vishwas Shringi, CEO & Founder, Voylla.com states. His website deals with fashion imitation jewellery.
However, he has a warning: “Flash sales should be a one-off event. If it prolongs for an extended period, it means the product was never priced right in the first place. The customers need to be more aware of these tactics,” he adds.
The e-commerce ventures benefit in two ways. First, the procurement cost goes down with scale and one-time processing overhead gets spread over many units. With this, maximum benefit can be passed on to the consumer. “Another benefit of these sales is that they help in brand building. Some unknown brands find a way to get into consumers zone. All the brand needs to do is build trust. So, the next time round, the consumer does not worry about a discounted product. Word of mouth and social media mileage that new brands get from these sales helps their presence and selling volume,” Shringhi explains.
However, not every player in this space is focused on flash sales to give a boost to their figures. Top ventures like Myntra for instance, want to play it safe. “The limited period deals play a crucial part in making us popular but it is also the after-deals and before-deals marketing strategies that decide which player is there long term. At Myntra, we do a variety of user interactions like fashion tips, blogs etc to engage our customers. We are also building on our app store as we feel mobile shopping is going to be the next big thing in India,” Myntra CEO Ganesh Subramanium says.
He feels that with the trend of buying online has caught up, at the cost of the retail sector. “Nowadays people don’t bat an eyelid before purchasing a flat screen TV or refrigerator. You can sell just about anything on the Internet,” he says laughingly. And Vedanarayanan Vedantham, head of marketing for stayzilla.com, agrees with him.
It’s been a few years since this boarding and lodging website forayed into India and Veda’s portal has already seen a massive growth in terms of customer acquisition. “There is a lot of scope in the lower-middle segment and we want to focus on that sector. Attractive deals is the first way that a hotel can reach out to the customer. But our forte lies in recall visits too. We bank heavily on how many customers return to us after a limited period sale is over,” he says, explaining that for a three-star resort situated in the outskirts of Pondicherry, the best way to reach out to a wider customer base is through a tie-up with a trusted e-marketplace and offer a deal that is irresistible.
For him, the biggest challenge in travel space is user experience and how well he is guided through the process. “It is not as simple as buying a pair of shoes online. On behalf of our customers, we reach out to the vendor and strike a deal. Every minute request of the customer is dealt with,” he says, adding that prevention of any backlash is better than cure.
Other market players like Jabong strongly believe that huge deals and flash sales on a daily basis across certain segments are not sustainable. Travel is one such segment. “There was a time when the airlines were offering tickets worth Rs1 to flyers. That is not a sustainable price point. Many companies had to suffer losses due to this ‘flash’ sale. The end users were also unhappy because the airlines could not deliver what they promised. In the online world, flash sales could work for fashion, accessories and technology, where the vendor wants to sell off-season stocks on heavy discount,” Praveen Sinha, founder and MD of Jabong, says.
He states that introducing mega discounts without ensuring that your technology and backend is equipped to handle huge orders is like organising a kumbh mela and not having adequate security measures in place. “A friendly user experience should be the primary concern,” he adds.
But is it that simple to monitor big flash sales on the website and their impact on footfallIJ “As a back-end exercise, it is fairly easy to manage surplus merchandise deals bit. But flash sales where the vendor reaches out to multiple partners at the same time becomes a tad difficult because suddenly there is a lot of activity seen on the server and it becomes a logistical nightmare,” Ankit Pruthi, co-owner of Unicommerce, an ecommerce management software & fulfillment solutions in India operating on B2B and B2C models, says.
Today, the inventory management software company and its products are the backbone of inventory management for companies like Snapdeal, Jabong, Myntra, Caratlane and Groupon among several others in India. .
One of the main reasons why the Flipkart billion-day couldn’t take off was because no one expected such a huge turn-up. “It was a simple case of expecting 5X footfall and landing up with 10X users,” Pruthi adds.
Mediratta agrees that it’s not everyone’s cup of tea to host mega sales. “Every day we bring more than 20 new flash sales/events across international, national brands and designer labels with discounts ranging from 40%-80% off. The sole challenge is to how we succeed in overwhelming our member base. It’s possible only by working in tandem with our supplier base across the globe and still manage to deliver on expected timelines,” he adds.
The challenge to keep up with this strategy differs from industry to industry. “In my segment (food) the deals have to be done with utmost care because there is no managed inventory. So you are never aware of what is the limit of orders a restaurant can take. In such scenarios, service is undoubtedly impacted.
“Second, hunger has very limited patience. Unlike in every other e-commerce space where you can plan your logistics and provide a delivery day, food ordering is instant. Everybody is hungry at same time and everybody wants food in 30 minutes. This requires great technical and operational efficiency,” Shachin Bharadwaj, CEO & Founder of Tastykhana, says.
At the end of the day, it is the trust and the faith that the website has managed to build with the customers that needs to be taken into consideration before a big deal is planned.
“Can you deliver as per promiseIJ Is your backend ops team ready to deal with bulk ordersIJ Is your shipment partner willing to do more delivery per dayIJ These are pertinent queries that need to be answered before going through with your plan for a big billion discount. It is unfortunate that a reputed brand like Flipkart had to suffer from a consumer outrage during a time when a lot of players are making an entry into the Indian ecommerce space. They will have to do something to bounce back in the game. Although brand re-building is a huge task,” N Chandramoulii , CEO of Trust Research Advisory, states.
He tells you that most of the ecommerce and retail outlets have to learn to do deals which they can manage and sustain for that period of time. “It is true for retail outlets too. See what happened to the Big Bazzar mega annual discount plan. It flopped as soon as the crowd started growing. Brands need to remember that if the consumer did not end up having a happy time shopping, they are always going to blame the organiser of such an irrational sale. It is better to keep it limited than to bear the brunt of an backlash,” Chandramoulli says.
Being the pioneer of online travel and stay offers, Sharat Dhall, President of Yatra Online Pvt limited tells you that instead of focusing primarily on flash sales and heavy discounts, the eccomerce company should get their basics right.
“Sales and discounts are no doubt a big crowd puller but they won’t work unless you have the fundamental principle in place. For us at Yatra, the consumer happiness is of paramount importance. If he is happy and has had a pleasurable experience surfing on our site, he will keep coming back to us.
“We introduce a lot of loyalty programmes on the website which guarantees instant cash back into the account of the consumer on the site. Our feedback team is well equipped to handle problems of the customers and we guide them through every small deal on the website,” Dhall talks about their sales model.
EXPERT TAlK
There is a limit to the number of times you will shop for clothes, electronic etc but for food, there is no limit. It is one of the biggest drivers in India and a sale in this space makes it lucrative! | Sachhin Bharadwaj, Tastykhanna
The sales model works to an extent. Your marketing strategy should be post and pre-mega sale period. It is also a good idea to engage in user interaction to build customer acquisition | Ganesh Subramanium, Myntra
The first priority is that the customer should have a pleasurable experience while shopping on your site. Ecommerce companies who rely solely on building their own brand will suffer | Praveen Sinha, Jabong
This works in fashion brands & accessories, since trends undergo season and cycle changes and there is a lot of unsold inventory post a season. The same applies in electronics and luxury brands | Aasheesh Mediratta, fashionandyou.com