oppn parties Ecommerce: Tweaking Strategy to Combat No Deep-Discounting Fiat

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  • Calcutta HC says Cricket Association of Bengal is not liable to pay tax on advertisement inisde Eden Gardens cricket ground as it is not a 'public place' because it does not have unrestricted access for the general public
  • Supreme Court admits a plea from a child of a single OBC mother who had applied for an OBC certificate for her son
  • Supreme Court approves applying strict preventive detention laws for 'cybercriminals'
  • SBI likely to shift part of operations of its Global Market Unit from Kolkata to Mumbai
  • FM nirmala Sitharaman calls for a "structured, process-driven approach to compliance" and asks top I-T officials to speed up refunds and simplify processes
  • Marine insurance costs surge as the oil corridor in Strait of Homruz becomes risky due to war
  • Stocks weaken on Monday on global cues: sensex sheds 511 points to 81896 and Nifty 140 points to 24971
  • Former left-arm spinner Dilip Doshi dies in London at 77. He played for India in 33 Test matches and for Bengal in domestic tournaments
  • Pant becomes the only keeper to score two centuries in the same Test in England
  • England Test: Rishabh Pant hits his second ton and KL Rahul a classy century to put India on top, England need 350 runs on the last day, with the ptich showing signs of wear and tear
  • DGCA orders an audit of the entire aviation ecosystem in the wake of recent snags in many flights after the AI Dreamliner crash in Ahmedabad
  • 2 Pahalgam residents arrested by NIA for sheltering and aiding 3 terrorists who killed civilian tourists in pahalgam tell the agency that there were 3 LeT ultras from Pakistan that carried out the attack
  • India unlikely to agree to US demands for lower tariffs on agri products and GM food, trade deal faces fresh hurdles
  • Stocks likely to plummet today as traders will be worried about the effect of US strike on iran, oil price rise and possible inflation. Foreign funds may also withdraw in the volatile global situation
  • Oil prices likely to shoot up as US strikes at iran and the latter decides to close the Strait of Homruz
US President Donald Trump unilaterally announces a 'ceasefire' between Israel & Iran
oppn parties
Ecommerce: Tweaking Strategy to Combat No Deep-Discounting Fiat

By Sunil Garodia
First publised on 2016-08-31 11:50:12

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
Government disallows deep discounting by aggregators
The government has cracked down on deep-discounting by etailers. Hence, all the biggies in the business are tweaking their frontend model. Ways are being devised to offer merchandize to the customer at the same deeply discounted rates by dressing it up to look like something else.

Discounts to be borne by sellers
The government had prescribed that etailers could not offer upfront discounts to buyers. If they wished to offer merchandize at discounted rates, the mark down had to be borne by the manufacturer or the seller on the marketplace.

Commission cannot be used to offer discounts
This went against the normal ecommerce practice of aggregators offering special discounts (over and above the price set by the seller) during promotions to lure customers and widen their customer base. This discount was offered from the commissions they received from the sellers.

Aggregators tweaking strategy
To circumvent this government fiat, the ecommerce aggregators are thinking of adopting several methods. In the first method, they are asking the seller to reduce their commission by up to 50% and mark down his pricing by that amount to pass the benefit directly to the customer. Then, they are providing credit to the seller equivalent to the discount offered to customer.

Innovative value addition needed
Apart from this, other value addition elements like product exchange, no-cost EMI and easy, hassle-free return policy are being put in place to make the shopping experience unique in order to retain the customer base. Customers will be angry at vanishing discounts and marketplaces will need to minimize this dissatisfaction level with innovative offerings.

Every marketplace sells the same products
Ecommerce marketplaces have established their bona fides regarding product quality, price, delivery and returns. Hence, many shoppers have made them their first choice buying platform. But it is often seen that the discount offered is the main attraction for these buyers. With very little to separate the marketplaces in terms of product offerings, it is the discount which clinches the deal. Hence, customer retention is solely based on the amount of discount being offered.

Upcoming festival season to be a stern test
Hence, the government restriction on deep-discounting by aggregators will work as a blessing in disguise for these marketplaces. Deep discounting business model was faulty. Most of them were bleeding and survival was at stake. Some had closed down while others had been acquired by the biggies. The upcoming festival season will be a stern test for these marketplaces. With new strategies in place, the coming few months will define the route ecommerce will take in India hereafter.