Online Diwali sales may not light up the virtual sky

Over the last few years, etailers have been falling over each other to give hefty discounts to shoppers. However, this year might be a little different. Leading ecommerce sites will not be going in for the usual deep discount strategy.

The festive season is all set to begin in a few weeks’ time, with the start of Navarathri or Dussehra, and will go on till Diwali. This season has traditionally marked a rise in the sale of apparel, electronics, and household goods. While most etailers will be offering festive discounts, it is not going to be as good as the percentages that were offered in the earlier seasons.

Focus shifting to profit margins

Having consolidated their position in the market, and with a sizeable customer base to back them up, online retailers are now looking at improving their profits. This change in gear has been on the cards for some time. IOS had predicted this when we listed out possible trends for 2015.

Leading etailers are believed to have told major electronics brands that the discounts this year will be at a comparatively lesser rate. “They (ecommerce leaders) have informed us that there won’t be any deep discounting for the big brands since they want to earn healthy profit margins too, with ecommerce sales expected to double this year,” said the sales head of a leading Japanese electronics brand, on condition of anonymity.

Focus on delivery and promotions

Ecommerce sites will continue to spend heavily on advertisements and promotions for the festive sales. They will concentrate on strengthening the logistics sector. Manish Sharma, MD Panasonic India says, “This season, lesser discounts and offers are expected to be floated as compared to last year as there needs to be more focus on tightening delivery systems and processes.”

Good news for sellers

This move could spell hope for online sellers, as this will substantially improve their profit margins. With this move, the festive cheer can be shared by both the shoppers and sellers. The discount rates are said to be between 5 to 15% for leading brands, and a higher percentage can be expected on online brands and private labels.