Even as Indian consumers ready for festivities – which kick off in August starting with Onam (the Malayali harvest festival) and peak on big days including Diwali, Christmas, and New Year’s Day – e-commerce players are preparing for different ways to woo customers.
If the year had been 2013 or 2014, any number of discounts or bumper sales e-tailers planned for Diwali quarter sales would have dominated the news.
But cut to 2016, and all that e-commerce players are talking about is improving back-end structure, strengthening their supply chain and deepening the product range on their platforms. Sales seem to gave dried up.
The reason – On April 1, the Government allowed 100 per cent FDI in e-commerce marketplace but banned discounts by these marketplaces. Online platforms can no longer use cash to subsidise products or even offer deep discounts. Suddenly, e-players are stuck, brainstorming on ways to attract consumers to online shopping.
Companies such as eBay India have started working with their sellers to figure out reasonable discounts that can be offered to end consumers in a bid to cash in on the festive season.
“True, that the year will not see bumper discounts as we have been witnessing from last few years but fortunately we will also not see companies showing gross merchandise value(GMVs) which were driven by these unhealthy discounts,” VP and MD, eBay India, Latif Nathani told Indiaretailing Bureau.
“Discounting is the part of any companies marketing strategy either online or offline. It was detrimental when it was out of hand but now what we will see will be the healthy business practice,” he added.
For the festive season, eBay has a line up of over 10 crore global products for consumers to choose from. The company claims to see massive organic growth through these sales.
“We have invested in deepening and diversifying our product range, through the small and medium entrepreneurs in India or by bringing in supply from across the globe. This festive season we have over 10 crore global products on offer for Indian consumers,” Nathani said.
What Other Players Are Doing
Along with FDI riders, e-commerce players also have witnessed a year of funding freeze which will have a direct impact on this year’s bumper sales.
For the last few months, online marketplaces have been thinking of ways to comply with new FDI rules and yet offer good deals to drive traffic and sales. Last month’s Independence day sales have seen the glimpse of former’s preparedness for big festive season battle.
For instance, e-commerce companies have for the first time carried disclaimers in print advertisements stating that deals and discounts are offered only by the sellers.
In order to encourage sellers on the platform, the companies are also coming up with ways to offer working capital loans to merchants. For instance, ShopClues recently announced it plans to disburse Rs 5,000 crore worth of loans to merchants selling on its platform under its financing initiative Capital Wings. Of this, Rs.200 crore will be disbursed ahead of this year’s Diwali festival.
Similarly, Flipkart’s Growth Capital program for sellers has also crossed Rs 125 crore milestone recently. In just a year of its launch, the program has successfully disbursed loans amounting to over Rs 125 crore to more than 800 sellers on its platform.