Mumbai: While the festival season is seeing Amazon India and Flipkart battle for supremacy with extensive online sales, conglomerates like the Tata Group, Aditya Birla Group and Reliance Industries Ltd. (RIL), which launched their online retail ventures in the past one year, have also jumped onto the sales bandwagon.
However, for the conglomerates, caution is the keyword as they are keeping an eye on sustainability.
Tata Group’s Tata CLiQ, which completed over five months of operations, is having a month-long festive sale called Festober (from 1-30 October).
Even Aditya Birla Group’s abof.com had an extra 25% off from 21-23 October, whereas ajio.com has several offers ranging from cash back, to free movie tickets and buy-one, get-one free on select merchandise.
For the large etailers, sales is part of their strategy to lure people to buy on their sites by advertising heavily.
Whereas, conglomerates like Tata CLiQ are still to spend on mass advertising (print and television) and even abof.com, which is advertising in mass media, is focusing on experience and differentiation rather than online sale to attract consumers.
“It is widely believed that ecommerce is all about discounts,” said Ashutosh Pandey, chief executive officer, Tata CLiQ.com, while explaining that there is a large segment of customers who value convenience of omni channel, click and pick and not just price as the portal is growing 2-3 times ahead of its own estimates. "We have consciously taken a route of working with brands to enhance the range and experience on site, and not just focus on discounts," adds Pandey.
Likewise for abof.com. “Our pitch was exactly the opposite,” said Prashant Gupta, president and chief executive officer, abof.com, while sharing that the etailer stayed away from advertising and instead focused on highlighting its newly-launched services like delivery on Sunday and segments like sarees and ready- to-wear sarees this month.
Meanwhile on Friday, Amazon India concluded the wave 2 of the Great Indian Festival, which started on 17 October, and it has already stared advertising for yet another sale. Similarly, with Flipkart, which is also advertising for its second edition of sales, which will be held from 25-28 October.
Festive seasons are a huge buying occasion in India accounting for 15- 20% of the topline for the year for retailers and etailers. "Post the advent of e-tailing there is little brand loyalty shown during this period and it is about the sales and offers. Further, the festive season revenues for most companies is proportional to their spends on outreach to customers through aggressive marketing," said Sreedhar Prasad, partner, strategy and operations, KPMG India, a management consultancy and auditing firm. Prasad feels the conglomerates missed out the opportunity to connect with consumers who are targeted heavily by the well-funded online marketplaces.
For the conglomerates sustainability is high on the agenda. “We want to build a model that is self-sustaining,” said Pandey and added that its current performance, both on sales and profitability, is significantly better than their projections.
Even at abof.com, the company is “carefully giving the discounts where it is relevant, so that we don't get shut out from the market”, said Gupta.
Discounts can't be entirely done away with.
At Tata CLiQ.com, 40-50% of its revenues in fashion come from discounts whereas in electronics, discounts account for 60-65% of its overall sales. For abof.com full priced merchandise accounts for 40-50% of its sales and the remaining is from discounts.