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Indian e-discounts drying up

News, 11 December 2014

NEW DELHI: As Indian consumers chased bargains during another online shopping event, industry figures suggested that prices would soon be a less important factor in the country's ecommerce boom.

The three-day Great Online Shopping Festival (GOSF), promoted by Google, kicked off yesterday with 450 vendors featured, up from 250 last year, and most anticipating sales three times their daily average. More than 5m potential shoppers had registered at the GOSF site ahead of its start.

Nitin Bawankule, director for ecommerce and online classifieds at Google India, told the Financial Express that convenience and choice were now more important reasons than discounts for shoppers to buy online.

That is just as well for the ecommerce companies which have been rapidly built scale with a variety of price-cutting offers and promotions, a business model that is now starting to evolve as they turn their focus to profitability.

'Overall, I would say discounts have to stabilise,' Praveen Sinha, co-founder of fashion portal Jabong, told the Economic Times. 'But I would say that there will be always some discounts there for ecommerce companies as we have the advantage of scale and we don't have the real-estate and overhead costs associated with that of offline retailers.'

In a virtuous circle, one of the most sought-after products during such events are mobile phones, which in turn help drive more online shopping. Google, for example, is using the GOSF to launch its Nexus 6 smartphone.

Bawankule argued that the GOSF could be regarded as setting the trend for the coming year in ecommerce. In 2013, he explained that 45% of users had come from mobile phones. 'At that time the ecommerce players were getting less than 20% of the transactions through mobile phones, so we told the merchants to develop their mobile platforms like apps,' he said. And now ecommerce firms typically see 45% of users coming on mobile platforms.

Data sourced from Economic Times, Financial Express; additional content by Warc staff