Sunday, 15 December 2013

Discount & E-Commerce

Flipkart, Jabong and there are many other websites in
e-commerce business selling you Apparels. What is common between all these
e-commerce websites? They all are selling product at discounted price. There
are many experts who talk about the bleeding business of e-commerce. Mahesh
Murthy always told that how an e-commerce business can make profit with product
& service differentiation. I have worked in e-commerce industry for +2
years and I know about the customer acquisition cost & money burnt on
marketing. On top of that e-commerce companies are not charging you for
shipping & COD services.

I myself have purchased more than Rs1lac of product from
various portals last year. My shopping kart also includes electronics items
like mobile. As we all so call visionary (pun intended) are thinking &
predicting about the e-commerce business & their revenue model. I
experienced road map of e-commerce companies are drawing to make profit. My
recent experience with Jabong & my little investigation after that revels
the road map plan for e-commerce companies to make profit.

The Brand you are purchasing for e-commerce website is
original? If they are selling original brand then how they can sale it for
almost 40% off on MRP price, whereas a dealer get only 25% margin on MRP price.
So they charge you 40% less on MRP price, they don’t charge you for shipping
price, they don’t charge you for COD service & on top of that they pay
Rs800 to instigate you to purchase from their websites. There were lot’s of
explanation to support the method e-commerce websites are following for such
discount pricing.

Let’s understand it from my experience on I
ordered Levis jeans on jabong. The price mentioned on jabong website for the
said jeans was Rs2000. (in off line store you won’t get Levis jeans below Rs.
2,500.) I used some coupon and finally paid Rs1600 & purchased the jeans. I
got my delivery next day (jabong is very good in shipping service). The quality
of jeans was worst than Zovi jeans (Zovi is online portal selling jeans for
Rs600). The jeans was very rough & after wearing it I felt that it’s jute
bag & not Levis jeans.

Is it original Levis product?

Yes, it’s original levis product. So why the quality of
jeans is so poor? I called up the Jabong guys for such a inferior quality
product & they arranged for the reverse pick up of the product. They gave
me jabong points as refund so I can use them for my next purchase on jabong. So
story with jabong ends here but the story for the product starts here.

I spoke to the couple of people working in various apparels
brands. I shared my experience with them for the quality of product I received
in umbrella of brand called Levis and Sold to me by one of the best e-commerce
company called jabong. Brands are now a days making Product A & Product B.
Product A is to sale in offline market & without discount in online market.
Product A carries all the qualities for which that Brand is known. Product B is
of cheaper quality than product A. It carries the brand name but quality is not
guaranteed here. People purchase the Product B trusting the brand & same
time they pay less money to buy that brand, which is not possible in off line

Apparels brand & e-commerce companies are making money from
product B. So slowly & gradually E-commerce companies are changing their
strategy to generate revenue but at same time there high chances of customer
fraud because it’s difficult for normal customer to know that he is paying for
the product A or products B. E-commerce companies have introduced the new
called segment “market place”, which has great role in Product A & Product
B sale. I hope from next time you will be little extra careful while purchasing
product from e-commerce on discounted price.

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