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E-retailers cut coupon discounts

News, 05 March 2015

NEW DELHI: Leading ecommerce players in India, including Amazon and Flipcart, are reported to have made a collective decision to reduce coupon discounting to 20% by the end of this year.

According to unnamed industry insiders who spoke to the Economic Times, the companies want to boost profitability and stem losses generated by recent discounts of as much as 40%.

The global average is 20% and this is the target Indian e-retailers have set themselves, it is said. The sources also revealed that Jabong, Myntra and Snapdeal are among the companies thought to be taking part.

"Many of us have met and discussed on it a while back, particularly about coupons," said a senior executive at one of the largest ecommerce firms in the country.

"There was a time when we were creating market using it [coupon discounting] as an incentive to make people come on board. Now we do think it is time to bring it to normal level," the executive said.

Echoing the remarks, the co-founder of a large online retailer said it was about time ecommerce companies reduce discounts that are hurting their businesses.

"It should happen as the kind of discounts is not sustainable. But unless there are difficult questions from investors, how can there be a correction," the source said.

Nearly all the companies named in the report did not comment, but Snapdeal said: "Since Snapdeal is an online marketplace that connects buyers and sellers across the country, the pricing decision solely lies with the seller listing the product."

There was a surge in consumer spending during the Diwali festival in October last year, but the amount of discounting has reduced steadily since then and is now thought to hover around the 30% mark. It now appears it may continue its downward trajectory.

Data sourced from Economic Times; additional content by Warc staff