Marketplaces forced to be cautious with discounts as Govt. keeps tabs

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Since the introduction of the 100% FDI ruling in March, sales have declined. The burning question on everyone’s lips was, will online retail sales be back in form this festive season or will the festive sales be called off?

The festive season sales are finally here but are marketplaces following the rule of no discounts? To make sure no online marketplace is facilitating product discounts government agencies are keeping their eyes and ears open. Tabs will be kept on all offers and freebies from etailers during festive sales.

Marketplaces have faith in sales despite discount caution

As discounts are a strict no-no these days, marketplaces are bing cautious about their selling strategies. By reworking these strategies they have managed to follow government guidelines and manage sales as well. But without the heavy discounting backed by marketplaces it may be tough to match last year’s sales figures. However, online retailers Flipkart and Amazon still have faith in exceeding previous sales.

A Flipkart spokesperson said the discounts and prices for its Big Billion Days sale are decided by the sellers and brands taking part in the sales event.

Amazon India’s, category management vice-president, Manish Tiwari claimed this year’s festive sale will not ride on pricing alone. The etailer has spent a fortune on marketing its festive sale and improved logistics to a great degree to attract consumers. The number of sellers and products on the platform have gone up too; compared to last year.

Odds against online retail this festive season?

Some online marketplaces were forced to change the way they functioned to meet FDI guidelines. At least 3 meetings were held with the top government functionaries like Nirmala Sitharaman, the minister of commerce and industry. Marketplaces were informed that discounts must come from the sellers; not marketplaces. As a result etailers gave more attention to achieving profitability.

The head of corporate marketing at LG India, Niladri Datta mentioned that online marketplaces are seeking a means of consolidating businesses this year and this could affect festive sales growth.

He said, “You may find discounts online on small-ticket items such as 32-inch TVs and the likes, but when it comes to big-ticket products, shoppers would want to go for touch-and-feel.”

“If you don’t find good deals online, why wouldn’t you just buy from your neighbourhood store?”Questions Datta.

A senior executive from one of the country’s biggest apparel firms said, “In terms of value, their orders from us is around 20-25% less than last year. They have mostly opted for low-priced products.”

“Even a small discount on an expensive product means more money being burnt. Affordable products mean they can keep burn rate low,” He added.

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