The no of online shoppers is rising in India. Thanks to the deep discounts offered by the e-commerce companies in past. At one point the future of e-commerce in India was looking very bright. The e-commerce is undergoing major changes after govt restricted total sales from group company or single vendor at 25%. Therefore, after the new regulations came into the picture the discounts for online shoppers disappeared. In my opinion, 99% of the online shoppers failed to notice the same :). Still, the e-commerce marketplace found new ways to offer very controlled discounts. Anyways this post is not to discuss policy decisions.
In recent past, i observed some new trends and thought of sharing with online shoppers. As this blog is all about MONEY, therefore, i am sharing 5 trends that can burn hole in the pocket of online shoppers. The online shoppers should also beware of the dynamic pricing of e-commerce. To avoid any conflict, i will not mention the names of e-commerce websites but online shoppers are smart enough to understand :).
Online Shoppers – 5 Trends That Can Burn Hole in Your Pocket
1. Take it or Leave it
Recently, i was planning a buy an herbal shampoo for my wife. Unfortunately, this shampoo is not available in local market. As i order it regularly, therefore, i know its MRP by heart i.e. Rs 190 for a 200ml bottle. When i searched for this herbal shampoo on my favorite e-commerce site, i found that the price mentioned was Rs 275. Shipping was FREE. For a moment i thought that company might have increased the MRP.
On the payment page, my personal finance conscious woke up. I decided to check the price of the same product on other e-commerce sites. I found that the MRP is Rs 190 only but now all sellers are charging delivery charge of Rs 60 to Rs 80. Now you must be wondering what is so strange? The answer is that MRP of the product is replaced by Price. After that, i checked whether the listing is on MRP or Price for other products. It was shocking to know that for all the products only the Price was mentioned instead of MRP. Quite surprisingly, One of the sellers, listed same herbal shampoo for Rs 275 as a Price and Rs 80 towards delivery. Some sellers are following a smart strategy to sell the products on an e-commerce website.
The conclusion for online shoppers is that e-commerce pricing is now moving towards “Take it or Leave it” model. In my case, the said herbal shampoo is not available in my city, therefore, had NO Choice but to “Take it” at Rs 275 with so called “Free Delivery”. For me, most of the products are now in “Leave it” Category :). I will appreciate if online players clearly mention MRP and delivery charge separately. Clubbing both and only quoting Final Price is misleading. The reason being, as a customer i will not come to know about the MRP at the time of purchase and premium i am paying over MRP.
2. Delivery Charges
Recently, there was a rush to launch “premium” services by e-commerce players. The USP of such services is that delivery charges are waived off but the customer has to pay annual fees to avail this service. The service is FREE during the initial period. In my opinion, it is another way of buying a loyalty of online shoppers. To check the same, i tried placing an order of same two products on a couple of e-commerce websites. The min delivery charge for each product was Rs 40. Therefore, as a customer, i will not mind paying annual subscription charges of Rs 499 or Rs 999 for Free Delivery. The regular online shoppers can easily recover this cost but occasional online shoppers will prefer to pay a delivery charge.
So far so good but now online shoppers should read point no 1 and point no 2 together. It is quite a smart pricing. After paying annual membership fees, the probability is high that i will place an order from the same e-commerce website almost every time. The reason being, annual subscription fees paid by me will be on top of the mind. On top of it, the site is now NOT LISTING the products on MRP rather it is Take it or Leave it. The annual membership fees will force/push online shoppers to Take it rather leave it. In short, it is like playing with the psychology of the customer.
3. Mobile App
Though the discounts dried up on the web or mobile sites of the e-commerce player but online players are offering discounts on mobile apps. The objective is to hook online shoppers on their mobile app. Once you download a mobile app then the probability of ordering again from the same mobile app is high. At the macro level, the objective is that the online shoppers should not check/compare prices before placing the order.
Personally, i feel that Mobile App Business is unlikely to succeed. Some players took bold initiative to turn mobile app player but this strategy backfired. They are back on the website and mobile site :).
4. Price difference between Online and Offline Business is Narrowing or NIL
To share real life example. Recently, my parents were planning to buy a fully automatic washing machine. Though i was suggesting them online purchase to get some additional discounts but my mother wanted to check the model first i.e. look & feel. I also though it is good opportunity to check price difference between online and offline business.
We visited the nearest authorized showroom and my mother finalized the model. After finalizing the model, my mother handed over negotiation part to me. The MRP was around Rs 37,000 and the dealer quoted Rs 34,700. A little more bargain bring down the price to Rs 33,300 i.e. 10% discount on MRP. I know that margins are low in white goods and scope of negotiation is limited :).
I opened my smartphone to check the online price and the salesman was quite sharp and smart. He told me “Sir, Aap online price check kar lijiye. Hum price match kar denge“. Personally, I prefer online purchase only from two most popular e-commerce sites.
Quite surprisingly, my favorite site was quoting a rate of Rs 34,700 and the 2nd one was quoting Rs 32,700. One of the 2nd rung online players was quoting Rs 31,700. I showed the same to the salesman and was willing to close the deal for Rs 32,700. You will not believe that the salesman offered me Rs 31,700 i.e. lowest price offered online. My mother was quite happy as i helped her to negotiate from Rs 34,700 to Rs 31,700.
The point i am trying to make is that gone are the days when you can blindly assume the online pricing to be cheapest. This mistake can burn a hole in your pocket. The retail stores are willing to match the online price :). It is good news for the customer.
The wholesale is the new mantra for online players. This phenomenon is widespread for low-value products. In other words, if you want a discount then you should buy more. In fact couple of 2nd rung online players have a separate section on wholesale buying. To share another example, i was planning to buy a notebook for my daughter. She needed two. There was NO discount on the purchase of two notebooks. But the seller was offering 10% discount on a pack of 10.
During my next visit to the stationary shop, the retailer was willing to offer the same discount on the purchase of a pack of 10. Therefore, no incentive/discount for online shoppers.
Words of Wisdom:
The online shoppers expect that the e-commerce players should pass the benefit of low cost to the online shoppers. If this benefit vanishes then many customers like me may shift to traditional retail business. It’s a different matter if we are buying online only for convenience purpose and not price sensitive.
Here i am not saying we should not buy online. The message for online shoppers is that the blind faith on the pricing of online stores may burn a hole in your pocket. My recent experiences, now force me not only compare online prices but it is imperative to compare online price with a neighborhood retail store. Be penny wise and always remember that A Rupee saved is A Rupee earned :)
Copyright © Nitin Bhatia. All Rights Reserved.
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