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India: Ecommerce disrupting retail stores’ Independence Day party?

India is geared to celebrate 69 years of independence while marketers have realised the opportunity of sale mania. One of the trends that has emerged in the Indian ecommerce industry distinctly in the last year is the the explosion of discounts/flash sales during the festive period or public holiday. Traditionally sales have always been used as a means to entice people and associate emotion to shopping; and the growth of ecommerce has only aggravated the sentiment.

The discount and offers trend in the online space has become more prominent on back of increased smartphone penetrations and innovative initiatives from ecommerce players such as Snapdeal, Amazon, Shopclues, Flipkart, and Firstcry.com, among others. But the buzz around online shopping sale may have compromised the glitz for offline retailers who are offering equally attractive options this Independence Day.

According to research by industry bodies ASSOCHAM and Grant Thornton, the first half of 2015 has seen immense growth in the online segment and it further reckons positive projections, going forward. Online purchases made through mobile phones are steadily increasing in the country and expected to touch 40 million in 2016 from the current level of 30 million.

Until the advent of ecommerce portals, offline retailer such as Big Bazaar, Croma, and Shopper’s Stop were enjoying undisputed market share during the festive season and otherwise but online players have spoiled the party for offline retailers as they struggle hard to offer better discount deals.

The business model of ecommerce players which requires lower capital investment against offline retails, allow them to offer discounts upto 80 per cent to its consumer.

“Ecommerce players always have an cost advantage over brick-and-mortar stores as it does not involve warehousing costs and other logistics,” according to Ankita Tandon, Chief Operating Officer at CouponDunia.in. She added that whether online or offline, sales have always been as a means to create a habit of shopping among consumer and incentivise the consumer.

In the offline space, retailers have launched 3-5 day shopping festival with attractive deals and offers on categories such as Home and Kitchen, Electronics, Footware and Apparels Meanwhile, Amazon launched Great Indian Freedom Sale from August 10-12 and Snapdeal rolled Independence Day Freedom Week with attractive offers and discount in competition.

In addition to the Independence Day sales, e-tailers have not neglected their loyal mobile customers as they are offering extra cash back offers on the mobile app. The cash back offers on specific debit/credit cards and Amazon and Snapdeal vary between 5-15 per cent during the Independence Day sales.

Meanwhile some players are holding back their sale announcements and are maintaining secrecy about their offers and deals which will be disclosed on Independence Day itself – August 15. This will allow brands to attach the cheer around independence day to online and offline purchase.

The absence of festive season and public holiday has not deterred the mood of online player as they continue to launch flash sales and dedicated sales for its mobile app users during the rest of the year. Marketing pundits argue if the sale mania is a sustainable model for ecommerce players in the long run.

“Soon enough e-tailers will have to look beyond discount sales and price war and focus on attributes such as on-time delivery, user interface of the platform, return policy, etc to maintain an edge over other ecommerce players in the market and retain loyal customers,” said Prince Khanna, Founder and Business Head at Eleve Media.

Ms Tandon offers a different view and added, “Sales are always used as a hook and once the consumer is habituated, the quantum of sales may reduce but the concept of sales is not going to die anytime soon.”