Popularity of Coupons preventing etailers from curbing deep discounts

Indian ecommerce players are stuck in a vicious circle. While the company founders and investors want to reduce the dependence on discounts, study of online shopping trends reflect that majority of buyers look for deals and discounts over anything.

Online players say deep discounts need to go

Deals and discounts have been the ecommerce industry’s trump card so far, but it has also earned online marketplaces a reputation of being loss-making ventures. This LiveMint news story reveals how all major ecommerce companies are piling up losses.

• Jasper Infotech, the parent company of Snapdeal accumulated a loss of $206 million this FY, which is 4 times more compared to last year
  
• From Rs. 155 crore in first 6 months of the last FY year, Jabong’s losses climbed to Rs. 230 crore
• South Asian ecommerce leaders are losing $1.35 for every dollar of sales transaction

“If you have to grow this business sustainably, you can’t keep burning money. You have to figure out a way to make the economics work. One thing we are consistently trying to do over the next 12-18 months is to reduce the level of discounting, said Ananth Narayanan, CEO of Myntra while speaking about the curse of discounts with LiveMint.

But customers don’t want discounts to stop

FirstPost shared CouponDunia’s report on shopping trends using coupons in 2015. And it revealed that the high number of shoppers looking for discounts have accelerated the growth of the couponing industry.

Some of the interesting findings are:

• Couponing industry has grabbed 13.5 % of the total e-commerce target market
• 95% of buyers search for deals online, of which 75% search on couponing sites specifically
• Majority of the coupon shoppers fall under 25-34 age-group
• Top 5 coupon categories were fashion, food & drinks, mobiles & tablets, travel, and recharges
• Coupons of Paytm, eBay, Amazon, Snapdeal, Freecharge, Domino’s, Foodpanda, Jabong, Flipkart and Ola are hot favourites

The sheer number of people looking for coupons while shopping online indicates that the plan to get rid of deep discounts will be extremely tough to execute. Etailers are at the risk of losing customers, which none of them wants.

This is why players are adopting various ways to build customer loyalty while gradually reducing discounts.

“We, along with all the other e-commerce players, have trained consumers to look for discounts. And now we are slowly trying to get them off it”, said Narayanan.

Introducing online-only unique brands, celebrity brands, pushing apps, technologically advanced shopping features and makeovers are few of the ways ecommerce companies are trying to distract customers away from discounts.

Will buyers agree to shop online without discounts and pay full price? What do you think? Please share.