The online marketplaces have been accused by physical retailers of burning money to offer deep discounts and often these deep discounts have been touted as the major reason of the success of online shopping in India. Taking a note of the same, Indian’s biggest eRetailer Flipkart has altered its discounting strategy for its ongoing three-day sale.
No, the player has not decreased the percentage of discounts, but has asked sellers and brands to agree on a lower price and margin to offer rebates to consumers, instead of the marketplace burning cash.
This alteration came in wake of a recent government notification disallowing eCommerce marketplaces from directly or indirectly influencing sale prices along with maintaining a level playing field with brick-and-mortar retailers.
This ongoing Flipkart sale is the first major one after notification by the government in March allowing full foreign direct investment (FDI) in marketplaces with the rider that they will not influence prices of goods sold.
As a result, discounts during the sale have been primarily concentrated to online-exclusive models, while in case of big brands and fresh arrivals. Moreover, the products also available in physical stores are priced marginally less on Flipkart during the sale.
Brands have passed on inventory just for the sale period at a lower price to sellers at Flipkart and they have also agreed on a lower margin to bring down prices, another top executive with a consumer electronics brand said.