Home/ Companies / Start-ups/  Flipkart, Snapdeal, Amazon start discount war

Bengaluru: Online retailers will offer big discounts, engage in a pricing war, create cheeky ads on social media and poke fun at rivals as they try to outdo one another in the race to generate record revenues in the most important sale of the year.

Competition among online retailers for festival sales will be even more intense than last year, particularly as some are holding competing sales events. Additionally, all e-commerce firms including Flipkart, Snapdeal, Paytm and ShopClues have boosted their firepower by together raising more than $4 billion so far this year.

Snapdeal, the second largest online retailer, said on Monday the company saw a 17 times growth in GMV (gross merchandise value, or the cost of goods sold) during the Electronics Monday sale, which had discounts on smartphones, laptops, other electronics and home appliances.

“We are well on track to reach $100 million sales on our Electronics Monday Sale," said Rahul Taneja, vice-president, category management, Snapdeal, on Monday evening, nearly five hours before the end of day.

India’s largest e-commerce firm Flipkart will go head-to-head with Amazon India this week for online sales of smartphones, tablets, clothes and other products.

There is increased pressure on Flipkart and Snapdeal to generate bumper sales this Diwali after revenue growth at these companies slowed in the first quarter of the financial year. The festival-period quarter, including Diwali, accounts for more than half their annual sales.

Flipkart said on 28 September that this year’s version of the Big Billion Day sale will be open for five days from 13-17 October and will be limited to its smartphone app. The company will offer discounts on different categories on different days.

In response, Amazon India (promoted by Amazon Seller Services Pvt. Ltd) is holding a five-day sale during the same time, setting up a direct battle with its local rival. While Amazon’s sale isn’t restricted to its app, the company will offer higher discounts for app-based purchases.

While Flipkart and Amazon will go head on, Snapdeal (owned by Jasper Infotech Pvt. Ltd) and a new entrant, Paytm (owned by One97 Communications Ltd), are likely to enter the fray at some point with their own offerings.

Online marketplace ShopClues, run by Clues Network Pvt. Ltd, too goes live with its festive sale, #EkZeroKam, on Tuesday. The company expects to sell goods worth 1,500 crore between October and November, nearly a 10-fold increase over products sold during Diwali season in the previous year, Mint reported in September.

Even smaller e-commerce firms such as online beauty and wellness portal Nykaa have timed their sale accordingly.

Getting footfalls is what everyone strives for and this is the time to cash on the opportunity, according to Anand Ramanathan, director at KPMG Advisory Services, a consultancy firm. “Most of these companies sit on stuck inventory and if one company goes on sale chances for them to liquidate their stock later goes down. It will be a cash flow problem for everyone," he said. “These companies are tactically taking advantage of the situation."

Last year, Amazon and Snapdeal rode on the back of Flipkart’s extensive ad campaign for the Big Billion Day and generated their highest-ever daily sales then by catering to customers who were alienated by the collapse of Flipkart’s website and pricing gaffes made by the company.

Flipkart had spent tens of crores of rupees on marketing its one-day Big Billion Day sale last October, touting deep discounts on all kinds of products. The company took just 10 hours to hit its target of $100 million in gross sales (excluding discounts) on the day of the sale, which is inspired from similar shopping events such as Cyber Monday and Black Friday in the US and the Singles’ Day sale held by Chinese e-commerce giant Alibaba Group.

However, Flipkart was not prepared for the rush of traffic and the company’s founders Sachin Bansal and Binny Bansal were forced to apologize to angry customers for pushing up prices of some products, cancelling orders, inadequate stock and other glitches. Amazon and Snapdeal ended up as the biggest beneficiaries of Flipkart’s glitches simply by being there.

Already, executives at Snapdeal and Flipkart have started calling out each another on social media.

On Sunday, Snapdeal product head Anand Chandrasekaran put up a picture of Flipkart’s website being temporarily unavailable. On Twitter, he said, “Guess this is part of the app only strategy."

A few hours later, Flipkart chief product officer Punit Soni responded, “Anand, my friend :) we were testing our servers to prep for BBD (Big Billion Day). Sorry you had issues. Best of luck for the festival season!"

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Updated: 13 Oct 2015, 01:03 PM IST
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