Flipkart, Snapdeal will not compromise on profits, will sell smart during festive season

Shopping for festivities has begun and e-Commerce majors are announcing their shopping extravaganzas already.

Marketplaces like Flipkart and Snapdeal will get busy too but if you are thinking they will go out of their ways to offer you mind-blowing discounts, you are probably on the wrong tangent.

E-Commerce majors will establish their dominance but are unlikely to compromise on margin-eroding discounts.

They are going to sell smart and rely more on category-specific discounts, exclusive launches and cashback schemes.

More discounts will be offered in high-margin but relatively low-demand categories like home decor and kitchen.

Like Snapdeal's preview Diwali sale. It started on Monday and attractive discounts were in categories such as home and fashion.

The cashback schemes were on offer through its recently acquired digital payments platform Freecharge.

On average, discounts offered by online retailers have dropped to 15-20% this year from 25% in 2014.

"Etailers believe that there is a high degree of demand elasticity. We believe they will be wary of moderating the discounting aggressively," said analysts Sandeep Muthangi and Nandhish Dalal.

Meanwhile, Srinivas Murthy, senior vice-president-marketing, at Snapdeal, said they would offer discounts of up to 70% in the fashion, home and electronics categories.

"We are developing a host of solutions for our 150,000 sellers to help them to pre-empt demand, basis on data analysis of consumer purchase behaviour and stock-up on their inventory," said Murthy.

Flipkart’s annual 'Big Billion Day' sale will begin from October 13 to 17.

It is expected that India's etailing market will grow to around $50 billion by 2020 from $4 billion at the end of 2014, as companies aggressively chase gross merchandise value, or the total price of all the goods sold on a platform.

This has thereby attracted investors across the globe like DST Global, SoftBank, Alibaba Group, Amazon, to aggressively put in capital in India to acquire customers at any cost.

India Infoline stated that the marketing costs for etailers in India are as high as 30% of the gross merchandise value, as compared to 2.2% for China's Alibaba and 5.5% for Argentina's MercadoLibre.

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