Home / Industry / Retail /  Flipkart, Amazon, Snapdeal sales war forces hand of brick-and-mortar retailers

Bangalore/Mumbai: Scared at seeing customers rushing in droves to e-commerce firms Flipkart, Amazon and Snapdeal, offline retailers are being forced to increase discounts and promotional schemes this festive season even at the cost of a significant hit to their margins.

Flush with money from recent fund-raising efforts, India’s biggest online retailer Flipkart and rival Snapdeal are pulling out all stops this festive season to woo shoppers in a period that is crucial for them to justify, and possibly increase, their soaring valuations. The world’s largest retailer Amazon, meanwhile, is matching every step and promotional offers by local firms as it seeks to become the biggest player in India.

Thanks in part to tens of crores spent primarily by Flipkart, which promised “India’s biggest ever sale" on Monday, as well as rivals Amazon and Snapdeal on advertising their festive season sales, millions of people are expected to buy all kinds of things on these sites, quite possibly at the expense of offline retailers.

For instance, Flipkart has been marketing its “Big Billion Day" sale on 6 October for more than 10 days now. On Monday morning, Flipkart was offering discounts of up to 90% on gadgets such as Nokia Lumia phones and Samsung Galaxy tablets.

The company’s co-founders Sachin Bansal and Binny Bansal wrote an email to customers over the weekend, inviting them to shop on the site on Monday.

“To celebrate Flipkart’s journey, we are going to have a sale to end all sales. The Big Billion Day Sale is on the 6-10-2014...and the date is no coincidence. The day 6-10 marks the number of the flat we started out from," they wrote in the message.

Though many customers complained on social media sites that many products were sold out on Flipkart quicker than they could hit “buy" and that Flipkart intentionally jacked up prices of some products before the sale so as to make its discounts seem bigger, many of these shoppers are likely to end up going to Amazon or Snapdeal rather than a physical store.

Flipkart rivals Amazon India and Snapdeal have been mocking the company’s 6 October sale with campaigns of their own.

Snapdeal on Monday ran a campaign with the tagline “For others it’s a big day. For us, today is no different."

Amazon has been running a sale from 4-6 October, calling it the “Mission to Mars" weekend.

This change in buying habits of customers, who are now fast getting used to around-the-year discounts on e-commerce sites, is forcing offline retailers to react.

Although e-commerce accounts for less than 1% of the total retail market in India, it is by far the fastest growing retail channel. It is estimated to grow to as much as $22 billion (excluding travel) in five years from $3.1 billion currently, according to a November 2013 report by CLSA.

“Today it’s no longer about having offers only during the sales period. Consumers are bombarded with offers throughout the year," said Harkirat Singh, managing director, Woodland, an outdoor and adventure shoes brand with 480 company owned stores and 4000 shop-in-shops. “We have to accept this change in the market place and consumer behaviour and change with market."

Woodland has also got tie ups with portals like Myntra, Snapdeal which has led to an increase in the number of offers on the brand, Singh said.

“We have bigger and better offers than the year before. It is definitely at the cost of margins but volumes are expected to be better," said Ajit Joshi, chief executive officer at Infinity Retail Ltd, a Tata Group enterprise which runs the electronics retail chain Croma.

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