Every product, service or industry goes through various stages of life cycle, from Introduction, Growth to Maturity. It seems Indian E-Retail industry along with the rest of the ecommerce sectors has now reached the maturity stage. Strong indicator of this is the recent development of steep discount rates of high-brand apparels being slashed down by top shopping portals.
Yes, it is. In one of the stories published on IndianOnlineSeller about Future of Online Apparel Market in India, we had highlighted the perils of working & focusing on a discount model and its effect on brand value and customer experience.
Over the last year, the race to be on top intensified between Flipkart, Amazon, Snapdeal, Jabong and Myntra. And the bait they used to fish more customers was heavy and unfathomable discounts. The downside of this race was brand value of sellers as well as etailers took a serious hit.
Hence, it is great that prices of apparel are being standardised across all medium, be it Online or Offline Stores. The fact that Indian etailers are shifting their focus from discount model to a better quality and service driven model is excellent news from the business perspective. According to Kantar Retail, a London-based consultancy’s e-commerce and retail analyst, Stephen Mader, “This is a fairly consistent e-commerce maturity cycle that we’ve been seeing across different markets globally.”
Heavy discounts on online portals led to rise in expectations and disappointment as customers couldn’t understand the reason behind disparity in online and offline product pricing.
Woodland’s Managing Director shared, “We started facing complaints because customers who bought at our stores at full price felt cheated. They gave crazy discounts without our permission and we had to hold our supplies for a while. They have now agreed to sell at full price”.
This is why retail brand like Indian Terrain have been fighting with etailers against diluting brand value and are happy that discounts have dropped. Brand Head of Allen Solly in the same news report mentioned, “A lot of brands now realize that it is not sustainable to run on a heavily discount-focused model as there is a risk that it would erode brand value”.
It is quite possible that etailers made this move after several government bodies decided to scrutinise and regulate ecommerce industry closely. Following several complaints by seller and buyers, the need to set definite guidelines for Indian Ecommerce industry was identified by the government bodies such as RBI, home ministry, the department of revenue in the finance ministry, and ministry of corporate affairs.
Getting rid of discount led models will ensure that investor’s money is utilised for better purposes such as improving technology, logistics, product offerings and overall service quality. Investors will also get better return for their investments. As for customers, they too are happy with standardisation of prices, provided service, convenience, choices and trustworthiness of sites improve.
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