It is a sight that’s becoming increasingly common across electronic and mobile phone stores – customer walks in, have a look at the products, its features and price, and then checks out the same on e-tailers website on his smartphone. Mostly, they find the e-tailers offer to be more attractive, when compared.
Of course, it badly hits the brick-and-mortar shops, declining their sales, as online stores such as Flipkart, Amazon and Snapdeal are snapping away the customers. These online stores are not only lures the customers for mobiles and electronic goods, but just everything like shoes, white goods, clothes, books, accessories, medicines and household goods. You have everything at your doorstep, just a click away!
The online discount lure has hijacked the Diwali rush from retail showrooms this year and thus the mood in markets is distinctly downbeat.
A retailer at Gurgaon said, “Footfalls at dealerships this time are nowhere near the levels they usually are during the festival season. The days leading up to Diwali have traditionally been bumper days for us but the excitement is missing this time around. We cannot match the prices offered by e-tailers as we have higher overhead costs.”
For example, a 13-inch model of Apple’s MacBook Air laptop is sold for Rs 72,900 by traditional retailer Tata-owned Croma, while e-tailer Amazon is offering it at Rs 57,798 and Flipkart for Rs 67,999. Likewise, a Bosch washing machine is available at Rs 29,990 on Flipkart but a retailer at a store in Delhi’s Lodhi Road is selling it for Rs 34,000. This price difference doesn’t go unnoticed by the customers!
“There is a big pressure, especially in categories like mobile phones, laptops and computers,” says Sahil Gupta, a manager at Vijay Sales.
E-tailers keep coming up with different attractive offers and events which lures the customers into buying from there. Event like ‘Big Billion Day Sale’, which was held by Flipkart, is quite evident to prove the patterns of customers buying moods and behaviour. These target just everything a customer wants – electronics, shoes, TV, washing machines, latest fashionable clothes, medicines and now even crackers – you just name it!
“Customers are confused. They are coming to us and asking for the same discounts that were advertised in online sales. How can we sell them an iPhone 5S at Rs 34,000? It’s unreasonable,” says a mobile phone dealer from Pune. He says, “It is surprising how the phones with the heaviest discounts just disappeared within a few seconds during online sales. Perhaps the e-tailers are advertising these fantastic prices to get hits on their websites.”
“It is a tough situation. Most customers have delayed their purchase and are waiting for the next online sale. In all probability, they won’t get the items. But they can’t let go the temptation of stealing a fabulous bargain,” said another dealer from Kerala.
Even as the retailers are facing the mounting pressure, they are fighting back. Ajit Joshi, the CEO of Infiniti Retail (a parent company of Croma), says that the last word is yet to be said on this growing rivalry between the two sales mediums. Making an indirect reference to the e-tailers selling products below the cost price, he asks, “The undercutting that was noticed on Monday (Flipkart’s Big Billion Sale) will not last. How long can anybody burn money?” He added, “There is a limit to all this.”
E-tailers are forcing the brick-and-mortar players to change the way they do business. For instance, Croma has now tied up with Snapdeal besides selling through its own website.
While the two medium of sales are fighting, the customer is celebrating the change!