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Online platforms reduce discounts this festive season

By Sujata Sachdeva

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Ecommerce platforms have so far been banking on heavy discounts and offers to attract customers to keep businesses running. However, they are realising that the same strategy is holding them from making profits. Now that competition to stay ahead is increasing and every online firm eyeing profits, leading platforms such as Flipkart and Snapdeal, have decided to keep a check on discounts offered during this festive season.

However, electronic marketplaces plan to depend on category-specific discounts, new product launches and cashback schemes to drive sales and growth. Home decor and kitchen category players, according to experts, are expected to continue their dependability on heavy discounts.

Snapdeal's preview Diwali sale was an indicator of the trend that would be followed by online marketplaces around Diwali this year. While steepest discounts were offered in categories such as home and fashion; cashback schemes were a part of its recently acquired digital payments platform Freecharge, and the home page showcased exclusive deals on specific brands. On an average, discounts offered by online retailers are witnessing a drop to 15-20 percent this year from 25 percent in 2014, and is expected to witness a further decline to 10-15 percent next year, as per the recent India Infoline report.

The report further said that marketing costs for e-tailers in India are as high as 30 percent of the gross merchandise value, as compared to 2.2 percent for China's Alibaba and 5.5 percent for Argentina's MercadoLibre. Players expect this Diwali to be the last season of heavy discounting.

Flipkart
Snapdeal