Why you may not always get the best bargain on your online purchases

Online shopping websites are moderating discounts and manufacturers have also started tightly controlling the prices of goods sold on e-commerce platforms

The big sales from major online retailers ended recently. Hyderabad-based Gopi Krishna, who ordered household items during one such sale, realised that online does not necessarily mean cheaper prices. Krishna ordered three ceiling fans for which he paid Rs 1,950 each, including an additional 10 per cent discount on his credit card. When he later inquired about the prices of fans locally, the distributor offered them for Rs 1,750 each and was willing to offer a further discount for a bulk order.

Industry experts say that online retailers have been moderating the discounts that they offer. “Until about three-four years back, e-commerce players offered much higher discounts to attract customers. The discounts have been coming down. If there was 40-90 per cent discount on books earlier, for example, now you will find the discounts are now mere 10-15 per cent,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

As discounts moderate, it makes sense for shoppers to check their neighbourhood shop or departmental store for prices before making a purchase online. In fact, in the upcoming sale from offline retailer around the Independence Day, you can get better bargain than what online shopping websites had offered.

Brands prefer physical stores: Many big brands prefer the offline channel or physical stores. “On an average, for most major manufacturers, the online sale is 15-20 per cent. A majority of the sales -– over 80 per cent -– still comes from traditional channels,” says Ankur Bisen, senior vice president-retail & consumer products, Technopak Advisors.

Many brands, therefore, have tight control on the online prices of their products. They realise that the business of their traditional channel partners (distributors and retailers) suffer if the same product is available at a discount online. Brands such as Casio watches, for example, are not available at a discount online. “Many home appliances companies had even refused to honour warranties and support for their products bought online at much lower prices, and that has worked. The appliances are no longer sold at the heavy discounts, as they were earlier,” says Dutta.

Go to wholesale markets for the best price: Sudhir Vishwakarma wanted to buy computer components. He went to Mumbai’s computer component market at Lamington Road. The retailer made Vishwakarma open the online e-commerce players’ websites to compare the prices and offered a 10-20 per cent discount on the online price of each component.

Industry experts say that such ‘markets’ for specific goods like stationary, furniture, clothes, and so on, will continue to remain relevant and competitive. “If an item costs Rs 100 when it leaves a manufacturer’s factory, it can cost up to Rs 300 at the retail store. The costs keep going up as it moves from different players in the supply chain. Depending on whom the consumer approaches in the supply chain, he can end up getting the goods anywhere from Rs 110 to Rs 300,” explains Bisen.

E-commerce works better for electronics: At present, specific product categories like electronics are cheaper online. If you are looking to buy a mobile phone or smart gadgets, the deals and discounts offered online can help you get a good bargain. Similarly, for mid-range televisions, consumers can still get a better deal online. Many electronics brands have also consciously made e-commerce platforms their primary selling channels, and they have limited physical stores.

As e-commerce players are bringing down discounts, they are also adding private labels that are exclusively available at their websites. Myntra, for example, has private brands such as Roadster, Dressberry, Anouk and HRX brand. Online grocery retailer BigBasket has in-house brands such as Fresho!, BB Popular, BB Royal and Tasties. Amazon has AmazonBasics. As the e-commerce players are banking on these to developer customer loyalty, private label products are competitively priced, and discounts offered on them are higher on these during the sale.

Bargain at physical stores: When Vinod Kumar wanted to buy a refrigerator, he visited an electronic retail chain. He selected a model that cost Rs 65,000 which the store was selling at Rs 10,000 discount. When he checked online, the prices were the same, and he showed it to the salesperson. Instantly, the sales executive offered him another Rs 5,000 discount if he booked the fridge right away. Kumar agreed and asked for the final bargain the executive could offer. The salesperson responded by offering another Rs 2,000 reduction if Kumar was willing to take a loan to buy the fridge.

There could be many reasons for such bargains, say industry experts. It could be that the manufacturer is offering such leeway to the store or the store wants to exhaust the inventory. Such discounts are also possible when a shopper is buying multiple items, and the retail chain is making money on one item and is therefore willing to sell the other good at cost price. Don't shy away from bargaining as it can help you get a good deal.

Tricks that stores use to tempt you

• Price anchoring: Stores may mark up prices during sales and then offer a discount on the inflated prices.
• Double-discounting: Stores show two discounts. First, they reduce the price by say 20 per cent and then by an additional 25 per cent. The actual discount is 40 per cent.
• Discount on the second product: During sales, many stores offer a discount on the second product if you pay the full price for the first. This usually halves the discount if you consider the total priced paid.
• Contextual effect: Retail stores put a product with a high discount next to the one that has a low discount. Most consumer instantly got for the high-discount product.