Online marketplaces like Flipkart and Jabong offer mega sales with high discounts but according to a report, it is a myth that brands indulge in deeper discounts during the sales
Between January and August this year, e-commerce fashion companies recorded a spike of 417% in orders during special sale events. However, the average selling price (ASP)—the price at which a product is sold across platforms—dropped by 17% due to rapid price fluctuations over the period, according to a 2018 report, titled How India Buys Fashion Online, by e-commerce solutions provider Ace Turtle.
“Most online companies prepare well in advance for this sale period and clear stocks by giving discounts. This increase in online sales heralds a new and exciting phase for new brands. And for those who are small, online marketplaces have given them a new channel to reach more customers," said Baqar Naqvi, director, consumer products and retail, Wazir Advisors, a business consultancy firm. “Thus, while sale volumes have grown, ASPs have come down because of huge discounts, proliferation of private labels as well as smaller brands."
Sales data of fashion brands was analysed over eight months, and 26 days during this period were identified as “sales event days". Online marketplaces like Flipkart and Jabong offer mega sales like Big Billion Day and End of Reason Sale with high discounts but according to the report, it is a myth that brands indulge in deeper discounts during the sales. Average discount rolled out by e-commerce brands is 47% on regular days, which increases to only 50% during sales events.
Online platforms such as Flipkart and Snapdeal are looking for better opportunities in tier II and tier III cities because of the increasing demand from these regions. According to the report, Snapdeal gets 60% of its sale from tier II and beyond. Although e-commerce companies are stressing on growing their business in non-metro and smaller cities, brands are not fully prepared to do so despite experiencing a major chunk of their sales coming from non-metros.
“Tier II and tier III cities is where most of India’s middle class lives which makes these cities a key consumption hub. However, top-end brands find it difficult to run stores in these cities due to minimum viability and control issues. On the other hand, online channels don’t face any such issues and are able to serve these consumers along with good discounts and a wide range of options," said Naqvi.
The report also states that compared to metro cities, people in non-metro cities buy higher-priced products during sale event days, with footwear being the most favourite purchase. While the amount of sales increased by 14% in metro cities during sale event days, orders from non-metros saw a spike of 70%. The growth of order for footwear as a category was at 75% because the segment offers maximum discounts, said the report.
Despite this, the overall sales of apparel is more than any other category. Among non-metro cities, Rajkot, Jodhpur and Imphal witnessed maximum percentage increase in demand during sale event days compared to regular days and cities down south such as Coimbatore and Thiruvananthapuram witnessed more demand for discounted footwear.
Of all the metro cities, Delhi NCR leads in the number of orders for all categories during sale event days and regular days, followed by Bengaluru and Pune, the report said.