By Anjana George

Edited by, Madhavi Roy, Senior Editor, The Indian Economist

Figures doing the rounds these days include $3 billion, $16 billion and $100 million- and all these are aggregates of what our e-retailers are making today! The 6th of October was described as India’s ‘big billion day’ as Indian e-retail giant Flipkart announced the greatest offers to consumers. The entire nation was glued to the internet as they browsed through unimaginable offers-some to grab their share of discounts, the others to plan their next step of attack.

In business, competition has no boundaries and marketing is one field that entices one and all to this spectacle. The big billion day played witness to some extraordinary marketing ideas from e-commerce players Amazon and Snapdeal alike. With redirected links and ambush print-ads, creativity, wit and tension was put to the fore as these online players battled it out for consumer attention. At the end of it all, Flipkart took home, sales of $100 million in a single day, hitting an annual run rate of $3 billion as gross merchandise value (GMV).

It has been interesting to note how all of a sudden the e-commerce bug has caught on to India. Characterized as highly ‘choosy’ and ‘price-oriented’ costumers, Indians have now embraced the online shopping culture. When e-retail first entered the Indian market, consumers were apprehensive of this alternative because of their orthodox belief in the ‘touch and feel factor’. But of lately, India’s e-commerce market has grown at a staggering 88 per cent in 2013 to $16 billion.

In smartphone categories, online retailers now account for nearly 10% of the market share and hence this is the reason why certain new mobile launches happen exclusively on these sites. Online retailers also account for 5% of television sales. Besides electronics gadgets, apparel, home and kitchen appliances, beauty products and perfumes have witnessed significant upward movement in the past year. By 2025, the country’s e-commerce market is estimated to reach $56 billion.

E-retailing seems to have hit the right cord with the Indian consumer because of the increasing internet penetration (close to 10 percent), availability of more payment options, aggressive online discounts, rising fuel prices and availability of abundant online options. Interestingly, 65 per cent of online shoppers are male while 35 per cent are female.

To make the most of increasing online shopping trends, more companies have collaborated with daily deal and discount sites. But the heavy duty competition seen between rival e-retailers has angered some big brand consumer goods makers. Accusing them of devaluing their brands and threatening their livelihoods, LG, Sony and other traditional retailers made their discomfort felt at such marketing exercises being conducted. Online consumer platforms were created as an easy distribution channel but now they have turned into big revenue businesses themselves.

Brands are being offered at heavy discounts on various sites today. With Flipkart’s sales worth $100 billion, the question remains- who will foot the bill for these discounts? The e-retail giant is said to be losing about $10 million monthly largely due it dolling out excessive discounts to consumers. This is also true for its rivals- Amazon and Snapdeal. Discounting has taken a toll on company’s brand image as customers who buy the same product a day earlier at its correct market price could feel cheated and blame the brand. E-retailers are being accused of hampering brand image by offering excessive discounts and selling products below cost price. This in turn could impact sales of these brands by 30% and profitability by 60%.

The question often asked is, since e-retailers merely provide a technology platform for sellers who are registered with them and because the ownership of the inventory is not theirs, how can these marketplaces offer discounts? Possibly, the best way to reduce disruptions like these is deeper engagements with these online marketplaces. Company’s need to be keen in having fair competition in the marketplace and not favor one sales channel growing at the expense of another.

However the online shopping trend has caught on with Indian consumers with a kind of zeal that will only grow with time. The consumer is attracted to these portals only for the level of discounts offered by them. If these offers cease, the customer may find no benefit in harboring e-retail behavior. Easy access plus affordability are the traits that draw online shopping trends, and what Flipkart portrayed was an example of a watershed movement in the retail industry. Arch rivals, Amazon and Snapdeal could learn from Flipkart’s mistakes and maybe create a new milestone in online shopping.

Anjana George is a second year student pursuing Bachelor of Business Administration (BBA) from Christ University, Bangalore. She believes in the power of words and their magic to entwine people in thought and understanding. Her subjects of interest include politics, spirituality, architecture and movies among others. She is an avid reader and takes keen interest in writing, storytelling and photography. She aspires to be able to know people, places and lives and share her knowledge of experience with others. She can be contacted at the following email address- anjanageorge9686@gmail.com.

Posted by The Indian Economist | For the Curious Mind