Fewer online offers likely to boost offline sales this festive season

Government scrutiny on deep discounting and predatory pricing by e-commerce companies might finally give a boost to sales of bricks-and-mortar players this festive season. 

According to experts, offline players might see between 20 per cent and 30 per cent rise in sales over the last year as customers might again start venturing out and buying this festive season.

This year around, sources said, online marketplaces are planning to cut down on deep discounting on millions of products to stay off the radar of the commerce and consumer affairs ministries.

“In the last few meetings, Commerce Minister Piyush Goyal has made it clear that he wants to maintain a level playing field for both online and offline players. Predatory pricing is something the ministry has indicated would not be tolerated,” said a source close to the ministry.

Boosted by the government’s inclination to curb predatory pricing, offline players are also upping their game with a slew of offerings. From exclusive launches of fashion apparels by celebrities, mini concerts, free movie tickets, free Uber and Ola rides based on the billed amount, retailers throughout the country are trying to move beyond the discount game. They believe only differentiated offerings, not deep discounts, will promote actual sales in a slowdown year. 

Retailers believe they would be able to boost sales this festive season on the back of better services and differentiated products. “Blindly giving out discounts would not help anyone. It is all about the right product, value and experience. Brands that give out hefty discounts just bring down the value of their products companies who believe in their product and do not water down the price stand to benefit. This festive season would be all about such brands,” said Kumar Rajagopalan, chief executive officer, Retailers Association of India.  

Sources, however, said discounts on the number of products might go down this season. Also, the percentage of discounts offered might be much lesser than the past few years. “People who expect to buy products at 70-80 per cent discounts from online marketplaces might be disappointed as the companies are planning to not dole out such sales. Instead of predatory pricing, online players would have to concentrate on providing better service, add points to their membership plans that customers can use later,” said a source close to one of the biggest e-commerce players in the country.

Trader organisations such as the Confederation of All India Traders (CAIT) have urged Goyal to ensure the e-commerce companies should not hold festival sales and indulge in predatory pricing and deep discounts this time. 

“Such a step will give a breather to offline trade. It is expected that in such an event, the offline market can escalate its business about 30 per cent in this festival season. These companies have distorted Indian market in their lust to dominate the retail trade and also increase subsequent valuation of their respective companies,” said Praveen Khandelwal, secretary general, CAIT.