In
spite of the widely perceived image as a flop show, India's three
e-commerce biggies, appear to have actually managed to gain, as they
have achieved huge sales and an image makeover, just at the beginning
of the festivals season, uprooting the off line retailers doing
business in the traditional fashion by displaying goods in show
rooms. A friend, well connected with the electrical appliances trade
told me that almost all the retailers are aghast to see, customers
shunning their show rooms packed with goodies, all ready for the
festival season.
It all
began last week, when one of the big e-retailers in India, Flipkart
advertised a special one day sale on 9th
October and called it as the "Big Billion Day." It was
supposed to have been India's version of Black Friday ( a day when US
retailers offer mega discounts at the start of the Christmas shopping
season). Flipkart had announced that it would be offering massive
discounts, across a whole range of items. Some of the deals on offer
were real crazy like Karbonn cellphone at 1 rupee (original price
2,499 rupees), the Samsung Tab 2 at 1,390 rupees (original price
13,900 rupees), hand blenders at 1 rupee (original price 1,995
rupees) and JBL headphones at 99 rupees (original price 5,490
rupees).
The
sale was to begin at 8 AM, but as thousands of enthusiastic buyers
tried to log in, all hell broke loose, as things didn't exactly go to
plan. The big rush crashed Flipkart's servers. Customer screens
showed, items sold out within minutes, errors and payment page
freezing. The things became so bad that Flipkart founders had to
publicly apologize for the fiasco and say sorry in a lengthy email
to angry customers, who felt cheated. They tried to assuage the
feelings of many frustrated and furious customers by accepting that
Flipkart was not able to anticipate the glitches at the beginning of
the sale. The media declared the sale as a flop show and even called
the company as “Flopkart.” It was clear that Flipkart was the
talk of the town that day, but for all the wrong reasons.
It now
appears however, that things did not go that bad at all. Flipkart has
now announced that they achieved a billion hits and managed a sale
of 6 Billion Rupees (US$100 Million). This is indeed something
extraordinary, when we compare it with their last year's registered
sales of US$1 Billion achieved over entire year.
Surprisingly,
Flipkart's two main competitors, Snapdeal and Amazon also seem to
have gained. Snapdeal announced that it sold goods worth 10 million
Rupees for every 10 minutes on that day. We need to accept that
Flipkart's Friday blitzkrieg, did prove one thing emphatically.
India's e-retailing business is no longer a nascent market, hampered
by reasons like low penetration of broadband and poor logistics
infrastructure in the country. Flipkart has changed all that and its
competitors also have gained automatically in market perception. No
one can now write off India's e-commerce market any more.
After
the mega show is over, market analysts knives are out now. They feel
that since Flipkart has sold goods at such
low or discounted prices, it is obvious that they could not have made usual profits. Its one thing
to gain in market perception and image, but profit numbers would not
show any gain in the accounts, even assuming that supplier companies
have given the goods to Flipkart at special prices for a day. Would
these supplier companies take care of the repairs and maintenance?
Would there be a valid warranty? We may find answers to these
questions only later with actual experiences in the field. If they
do not give proper support, would it not damage Flipkart's image as a
reliable supplier?
About
a decade ago, when big retailers like “Croma” appeared in India,
who offered many varieties of white goods at lower prices, many
buyers had found out that the installation and maintenance, usually
offered by somebody else, contracted by the retailer, was not up to
the standard. Presently the usual practice is that the manufacturing
company offers these services to the customer with the retailer
having nothing do with it. It is possible that good sold on Flipkart
may also be serviced in the same fashion, but when goods are offered
at such low cost, would the manufacturing companies agree to offer
same quality free service for an year?
Then
there is a question of financial impact also. Supposedly Flipkart has
not made usual profit on Friday's sale or actually has even lost
money in it, who would bear the cost of this image makeover show?
Would it be the shareholders or financiers to the company? These are
some of the questions that are being asked by analysts.
One
thing however, has to be accepted. Flipkart has managed to establish
itself along with its competitors, Snapdeal and Amazon firmly in the
Indian market with this show. It has done it at the great cost to
off line retailers, who may find selling in the future more and more
difficult. An interesting question is that would this mega show
change forever the way in which Indians do their shopping? Only the
time would tell.
13th
October 2014
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