NEW DELHI: Government agencies are keeping tabs on offers and freebies being handed out by e-tailers this festival season after it asked the likes of Flipkart, Amazon and Snapdeal not to just refrain from discounting but to state clearly that rebate is being given by the seller and not online marketplace.
This has forced top e-marketplaces to adopt a cautious approach this year apart from reworking their strategy amid observations that the bumper turnover notched during the festive sale in 2014 and 2015 may be tough to match. While a Flipkart spokesperson said prices and discounts for its sales including Big Billion Days are decided by participating sellers and brands, Amazon India vice-president (category management) Manish Tiwari said this year, the sale will not be about pricing alone.
"We have increased number of sellers on our platform by 200% over last Diwali and our operating capacity is 1.5 times of what it was last year," Tiwari said. The change in strategy follows at least three meetings that e-tailers had with top government functionaries including commerce & industry minister Nirmala Sitharaman, where they were told that rules need to be followed and discounts have to come from the sellers and not the marketplace. Officials from ED were also present in at least one of the meetings to indicate that any violation would be seen as a non-compliance with the foreign investment guidelines. This has prompted e-tailers to turn their focus on profitability.
"In terms of value, their orders from us is around 20-25% less than last year. They have mostly opted for low-priced products," said a senior executive at one of India's largest apparel companies. "Even a small discount on an expensive product means more money being burnt. Affordable products mean they can keep burn rate low."
Niladri Datta, head, corporate marketing at LG India said e-tailers are looking to consolidate businesses this year and it may affect growth rate of festival sales. "You may find discounts online on small-ticket items such as 32-inch TVs and the likes, but when it comes to big-ticket products, shoppers would want to go for touch-and-feel," he said. "If you don't find good deals online, why wouldn't you just buy from your neighbourhood store?"