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Online retailers bet big on premium services to lure customers

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E-commerce players in India have been in a slugfest from time immemorial, all in a bid to conquer the top slot. And this festive season is no different.

E-tailers bet big on premium services to lure customers
This year, to be ahead of their competitors e-tailers are not only betting big on discounts and deals but also trying their best to erase the memories of service glitches

It was always expected that the funding freeze in India’s e-marketspace as well as the new FDI norms issued by the Government – which have all but put an end to deep discounts by e-marketplaces – will prove as a hindrance.

However, a brief lull in discounts followed a mighty sale resurgence. Etailers insist that discounts are not violating any FDI rules and are instead, sales offered by vendors / sellers for promotional events online.

READ MORE: The future of retail post 100 pc FDI in e-commerce

This year, to stay ahead of competitors e-tailers are not only betting big on discounts and deals but also trying their best to erase memories of service glitches that have spoiled customer experience over the past few years. And they are relying the most on their premium services to rope in the maximum customers towards their platform.

In July 2016, Amazon started first by introducing Amazon Prime. Flipkart and Snapdeal followed suit, introducing Flipkart Assured and Snapdeal Gold, respectively.

This is not for the first time that e-commerce players are trying their hand at premium services in India to improve customer stickiness and reduce re-acquisition costs for lapsed customers.

In 2014, Flipkart had launched a loyalty service called Flipkart First, which unfortunately did not attract any takers.

“Loyalty program in general creates a pool of loyal consumers both for offline and online retailers. These consumers spend at least two per cent more than the usual customers. With these premium services e-commerce players are trying to acquire customers on the basis of services and not discounts as they are any way coming down from past few months,” says Partner Asia Pacific AT Kearney, Debashish Mukherjee.

Though it is still too early to gauge the success of premium services in India but e-tailers have high hopes from these services especially for the coming festive season.

Amazon Prime

Amazon is trying to replicate the success story of Amazon Prime in the US by introducing it in 100 Indian cities ahead of the festive season with a 60-day free trial. Members of Amazon Prime have been guaranteed one-to-two-day delivery of purchases on Amazon. There are no limits on the number of fast deliveries a customer can avail.

Amazon Prime members have also been offered Prime Early Access – a service by which they can access top deals 30 minutes before regular customers every day.

In India, Prime is being offered at Rs 999 per year. In the US, patrons subscribing to Amazon Prime are charged $10.99 monthly and $99 annually. In India, however, the pricing is lower to crack the price sensitive Indian market.

READ MORE: Amazon.in announces festive sale ‘Great Indian Festival – Tyohar Bade Dilwala’

Country Head, Amazon India, Amit Agarwal says, “These marathon 120-hours of the event (Amazon’s Great Indian Festival – Tyohar Bade Dilwala) mark our continuing commitment to work closely with our partners and together bring the biggest sale yet for our customers, with the best ever shopping experience powered by Prime.”

Flipkart Assured

Flipkart and Snapdeal took the competition a notch higher by launching their premium services for free and have no plans to monetize it for now.

Flipkart Assured is a quality and speed assurance programme for customers across India. Under the programme, products carry the ‘Flipkart Assured’ badge, go through six levels of quality checks, and have an accelerated delivery process – delivered across India within two days.

READ MORE: Flipkart is back with third edition of ‘Big Billion Days’ sale

The programme is also enabled by world class algorithm developed by Flipkart’s data scientists that blends a wide range of factors, including customer returns, ratings, seller cancellations and other performance related factors integral to a great experience online.

This algorithm then badges a product Flipkart Assured purely based on performance. The feedback loop on top of this ensures the algorithms gets progressively better.

Snapdeal Gold

Snapdeal with its Snapdeal Gold services is also investing significantly to ramp up delivery and logistics capabilities to meet the surge in demand during the festive season. Snapdeal Gold expedites shipping and delivery.

Additionally, it guarantees free shipping, 100 per cent quality check and extended returns period for orders shipped under the premium service.

READ MORE: Snapdeal to take on Flipkart with Unbox Diwali Sale from Oct 2

“We are entering this season with the widest assortment, key brand partnerships and exclusive line of products…Our superfast deliveries and free shipping options through Snapdeal Gold will add further sparkle to festive offerings,” VP and Head of Categories, Snapdeal, Saurabh Bansal said.

Who Will Win?

As customer acquisition is expensive, e-tailers are leaving no stone unturned to retain existing customers to drive profitability. But while e-commerce players are striving hard to grab their share of the market, the consumer is the clear winner – he gets faster deliveries, assured availability, free content, privileged access to exclusive products and content, and much more at a minimum charge or free of cost.

With the run up to festive sales, it would be interesting to watch how premium services will change the game where bargain hunters rule the roost in India.

As of now, Indian consumers are still exploring the paid/ trial/ and free versions of premium services.