Recovery of Flipkart and Snapdeal

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Recovery of Flipkart and Snapdeal

#1 Postby ANKITSHAH » Mon Dec 15, 2014 5:05 pm

With the rise of e-commerce industry in India, the expectations of the people are also mounting. The commerce industry is growing at a CAGR of 35-40%which unequivocally proves the changing attitude of the public towards online shopping. The trust building on these websites had been a slow process. Initially the customers were not willing to buy online due to some of the following reasons like they could not try the goods before buying, fear that the goods might not be delivered if they pay for it previously, many of the places of India were not connected by fast courier services and could not be catered by the online retailer and also because of fear of the customer service. Since this sector was new to them so it took them some time to adapt to the process and create trust on the system. The e-commerce industry was however quick to identify these problems of the customers and introduced various methods to overcome their problems. The fear of not paying of goods after online payment of money was curtailed, by introduction of the Cash on Delivery System. The customer now felt safe to pay only when he receive the ordered good. Also, many e-commerce like Myntra and Jabong introduced a trail system in which the customers could order the garments/footwears/shoes of various sizes and colors, try them and get the one which best suited them. Besides this the logistics of e-commerce also improved and they now tied up with the local courier service to increase their extent of delivery of goods. Thus now the sector is pretty ready to cater any kind of service for the customers at any place in the country. The industry has grown by 500% since 2007. In 2010, all online purchases (in India) put together were worth $ 6.79 billion.
Currently, the ecommerce market in India is dominated by the online travel industry with over 78 percent market share while online retail of goods and products enjoys 6.48% market share. This also includes the booking of ticket at IRCTC which forms a major chunk of it. The coming generation of Indian retailers and manufacturers will be tech savvy and with calculated risk, they will certainly try ecommerce or e-tailing for their business. This will directly impact the positive growth of ecommerce. Thus we clearly see that e-commerce has a bright future.
The Big Sale of Big Billion Day by Flipkart on 5th October, 2014 turned out to be a big disaster day for Flipkart. Although it managed to sale $100mn of goods in just 10 hours, but now it is facing government scrutiny, following complaints from traders over undercutting prices and adversely affecting competition. A probe by the Competition Commission of India (CCI) is not ruled out. The fiasco by the biggest e-commerce company of India was quickly followed by apologies of co-founders Sachin Bansal and Binny Bansal. They sent email to buyers, who were angry over technical glitches and price anomalies. Also it was found that the goods were sold at less than their M.R.P (Maximum Retail Price) which is illegal. Apology of the Bansals might not be enough, as Commerce Minister Nirmala Sitharaman had indicated the government would take action against these avenues. She added the government would soon make it clear, after studying the matter, whether a separate policy or clarification was required for e-commerce.
Similar to Flipkart, Snapdeal also held its second big sale on 11th November, 2014 under the name of “Snapdeal Savings Day”. It rival Amazon also held Amazon Appiness Day sales but due to the availability of the sale only on Amazon applications, the competition to Snapdeal was not that stiff. Complaints about Snapdeal on the day were fewer than that of the Big Billion Day , one look at social media on Tuesday makes you wonder if Snapdeal has been caught unawares this time, or if these problems existed last month as well, but were drowned out in the outrage against Flipkart's higher profile sale. Some customers who were frustrated by the slow server of snapdeal and some who could not make payment due to lag in the server tweeted the deal as Crapdeal and expressed their resentment at other social media also.
The failure in organizing the sales of goods on these big days indicates that there is a scope of improvement in both the management and technical side of running the websites. The customers though were very irritated with the kind of performance of Indian e-commerce giants; still believe that they have a chance to recover from their bad reputation. It should be conceived that the goods purchased over internet are generally low involvement products. So the primary focus of the customers in buying these products would be cost. If the customer is able to get good discount on the websites they would prefer online shopping only. The trust broken could be regained if these websites become technically sound to operate such a sale event again in such a massive scale. This is just the beginning of e-commerce sector. We still have a long way to go

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