E-commerce : Unrealistic discounts are dangerous 

Discounts are good. They not only help the e-commerce companies increase their customer
base but also provide the customer goods at lesser price. Providing bumper discounts and
frequent sales have been proved to be a sure shot technique to generate revenue as well as to
grow their customer base in a short span of time. The big billion day sale offered by flipkart
provide the company with 600cr Rs of revenue on just one day. Considering such large scale
revenues, discounts are one of the best tool available with the e-commerce giants, but its
feasibility in the long run is still a matter of concern.  Let’s analyse the long term effect of
unrealistic discount on various stakeholders individually.

Costumers : For consumers it is surely beneficial in monetary terms, but subtly it is eroding
their saving capabilities. With growth of economy and availability of more disposable income,
buying things even with zero utility have become common. Today, people don’t hesitate to buy
things even if they don’t need it at the moment, just considering the discounts being offered. It is
eroding the saving capital of the economy and will come back to haunt us in case of economic
slowdown and recession.

Retailers: The largest hit due to growth of e-commerce is being taken by the retailers. Though
retailers till make for 95% of the purchases overall, but the unprecedented growth of e-
commerce has raised serious doubts about the future of retail. The big e-commerce giants with
the likes of Amazon and Flipkart are providing customer with huge discount which are not
feasible for a retailers and thus is eroding local retailer’s customer base. The entry of players
like Myntra and Jabong have disrupted the apparel sector, and with likes of Big Basket and
Groffers coming up, the local daily use item retailers are next in the line of fire. 

Brands: The large discount being offered on various brands is also affecting the customer
perception of different brands negatively. Seeing a 50% discount on the products of a brand
leads the customers to question the quality of these branded items. Also difference in the prices
of such branded goods with other normal goods, after discount, make these normal good more
attractive purchases as compared to the branded ones, thus adversely affecting their sales.

 The Company Itself : The long term implication for such unrealistic discounts are gloomy for
the e-commerce companies providing such discounts itself. Firstly the customers once get used
to the discounted prices, does not settle for the normal price when there is not discount being
offered. Also, frequent discounts and sales lead to the customer predicting sales and thus
buying during that particular time which in turn affect the regular sales. Also, though the topline
appears to be increasing, but very less focus is put on the bottom line. There are many cases
where companies provided heavy discount just to pull the customers and went into heavy losses
and thus ending up in bankruptcy.

Thus we can clearly see the in the long run, these unrealistic discount affect each one of the
stakeholder in an adverse way. There is thus a strong need to check such vague and unrealistic
offers. The e-commerce companies should be put under the umbrella of strong rules and
regulation, with government intervening to prevent the erosion of small and local retailers. Its is
very much important to maintain a balance between utilising the potential on the technologies
available with these e-commerce companies and safeguarding the opportunities for other small
players in the economy. This seems to be the only way forward for economies across the globe
for future growth and development.