The inherent human nature compels us to select an item that is available for less than our perceived sense of the value of that item. If we think that a product is worth X amount of money but it is available for X-10 amount of money, then we will, in most circumstances opt for the second option. This is the way, our brains are hardwired and large corporates are smartly playing with this since long. However, prolonged games of offers and discounts have landed them into trouble.
There are two kinds of retail, Offline and Online. The offline retail has been in existence since time immemorial, whereas, the online retail started to take off in the last decade. India has been rapid in adopting online retail channels. The online shopping scene has been a treasure trove for the consumers as most of the brands are giving lucrative offers and discounts on special occasions.
The problem started arising when this occasional event turned into an all year round chore for these companies and e-commerce platforms. What started out as a once in a while phenomenon, quickly became the habit of the consumers and it shot up the sales volume of the e-commerce players. This, in turn, took the players for a spin and they too got addicted to the discounting phenomenon with a hope to get more and more traffic on their platforms.
India is a land of festivals and especially in the later part of the year, most of the festivals hit one after another. Starting from Dussehra in the month of September-October, then Diwali and then ending with Christmas and New Year, the festivities go on and on. As much as these festivals shoot up the sales volume, it puts a lot of burden on these retailers.
It is common for tech-based startups to run in losses for the initial few years and then after reaching a certain volume depending on the market size, these companies start monetizing. Flipkart and Amazon are the two largest e-commerce players in India and they are each other’s throat all the time. If one launched heavy discount days, the other does the same and eventually, the losses keep on mounting. The categories that see most of the discounts are electronics, shoes, home appliances and kitchen appliances. They even offer free installation, which allure the customers to buy online instead of offline. In the case of apparel still a huge portion of the population prefer to shop offline as they get the chance to try it then and there before purchasing. It is crucial for these companies to clearly demarcate the boundaries in such situations to avoid loss-making moves.
However, it should be noted that it’s not only the online retailers facing losses, instead, the offline stores are lagging behind as well. The problem with the offline stores is that they have lost a bulk portion of the business to these online stores. Now, many people go to the online stores to shop and even if they somehow come to the offline stores they compare the prices with the online price listings to further lower the offline prices. The smaller offline players are helpless in this regard but the large offline stores are taking some significant steps as a part of the lethal competition. Reliance’s Fresh, Digital, Footprints and Trends, Aditya Birla Group’s More, Pantaloons, Big Bazar, Brand Factory, K Raheja Corp Group’s Shoppers Stop and Tata’s Croma are some of the renowned names in the Indian retail industry. These outlets focus on their offline presence and business instead of going online. However, it has been seen that these stores too lost customers to the online players and hence started giving out heavy discounts all year long. Ina recent event, Brand Factory, which is known for its stock of low priced branded items, launched its Free Shopping Weekends from 12th to 16th December. This is a huge event among the Indian shopping enthusiasts. This is crucial, especially to the middle-income group youths as it allows them to grab the products from the globally renowned brand but at almost half or even a quarter of the original prices.