Deals Vs General E-com, What Actually Works For India; Notes From Digital Commerce Conference

30 Apr, 2012

Indian ecommerce firms need to look at a hybrid business model which merges a standalone 'deals' business segment with a platform for general ecommerce, according to industry experts gathered at the 4th national conference on digital commerce, organized by The Internet and Mobile Association of India (IAMAI).

Techcircle puts together some points made by the panelists.

Gaurav Kachru, group executive vice president & CFO, Smile Group and co-founder, Deals and You, pointed out that the Indian consumer is not loyal to anything except his/her own wallet: "They will purchase from one site for a year and immediately switch to another if they get better deals on that site. So, fundamentally, I think the two models of deals and traditional ecommerce will converge at some levels. We already see deal players moving to more static services like listings and e-com players using deals to attract customers."

This is true as we have seen the biggest name in the deals space Snapdeal pivoting from a 'deals' only business to a general ecommerce firm and has been expanding the product categories with acquisitions and expanding the product catalogue. Another player in the business, Koovs, also metamorphosed in the same way.

Rajesh Nahar, CEO and founder, CBazaar said, "In the long term both deals and delivery will work since they offer different solutions to different customers. Deals make customers take impulsive purchase decisions (and are good to add a spike of customers to the site) while a delivery model retailer builds a customer base (on the basis of his product catalog)."

Ashish Kashyap, CEO of Ibibo also touched upon the lack of customer loyalty for deals business. "Deal customers are not ideal customers. We offer them deals; they buy them and go, they are not repeat/loyal customers. The actual customers are those who come to fulfil their needs, these are repeat customers," according to him.

He also stressed on the fact that since companies are working on the adoption of online shopping, free shipping is a must right now but, going forward, customers will have to share the shipping costs with the companies so as to improve the low margins. "But for this to work, everyone will have to start charging for shipping together, so that it doesn't bite the customers," he added.

We guess what Kashyap meant was that e-com firms (not consumers) who start charging for shipping do not feel the bite when other peers keep shipping free. However, isn't it internationally accepted practice for shipments to be free for large valued transactions? In fact, most Indian e-com firms already charge for shipping if the ticket value of the product is below a certain limit.

Muralikrishnan B, country manager for eBay India was apprehensive about Kashyap's proposal as there is too much cut-throat competition for every player to work in harmony and implement such a policy for shipping charges. According to him, maintaining a high level of customer experience is a key area for both e-com and value commerce (deals) players and while 'deals' is important to get customer attention, offering a wide selection is the key to get repeat customers.