The Independence Day long weekend is hardly a week away. And ecommerce leaders Amazon and Flipkart have started stocking ammo for the upcoming sale.
Etailers are expected to go all out and enter the discount war to woo buyers. From increasing ad spends to funding deep discounts, online marketplaces are prepared to do everything in their power.
According to Harminder Sahni, MD at Wazir Advisors,
“This time, Flipkart and Amazon will pull out all stops. However, brands across the board have been asking marketplaces to cut discounts, as they don’t want to hurt their offline business. It will be interesting to see how the marketplaces manage this conflict with brands.”
There’s significant drop in online sales in the last two quarters. The sales of Flipkart and Snapdeal dropped down drastically and Amazon’s growth slowed down.
FDI ruling is partially to be blamed for this, as etailers were unable to advertise freely and offer deep discounts. But the real blame lies with etailers that are heavily dependent on discounts.
The new FDI policies implemented in March this year had forced ecommerce firms to keep discounts on hold. Not for long, though. Amazon and Flipkart both found a way to shower discounts and hosted few low-key sale events.
But the Independence Day event will be the first festive sale after March. Next month i.e. September, the great Indian festive season will start.
As it has been in the last couple of years, the 2016 edition of festive sales will also be Flipkart VS Amazon. Snapdeal is nowhere near.
Out of the two, the pressure is high on Flipkart. Amazon is cash rich whereas Flipkart is cash poor. If not for the FDI guidelines, the American etailer wouldn’t have experienced sales slump.
“This festive season is make or break for us. There is pressure to cut costs, but the most important thing is now to get growth back to an acceptable level,” revealed a Flipkart manager.
It will be interesting to see how the Indian etailer will manage to cut costs and spend on ads & discounts. It will be even more interesting to see how the online marketplaces get away with giving heavy discounts. Do we see fresh lawsuits against ecommerce firms coming?
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