Friday, May 17, 2013

Discounts and ECommerce

A lady called us yesterday and asked for discounts. We asked her if she was interested in any particular product and she said that she hadn't made up her mind but was wondering if there were any discounts. This is a common happening for us - every other day we get inquiries for discounts. We had toyed with the idea about discounts quite a few times and had done some experimentation around it. Unlike most other ecommerce retailers, we also manufacture or handcraft our own products in house. Following were some of the things that came into our mind.

1) Discount in the Overall Price : Suppose a product has been priced at 100 Rs and we give a discount of 20%, the price becomes 80 Rs. Why not give it at 80 Rs itself ?

2) Standard Price : There are some items that have an MRP : example a book or a phone. When a discount is given, it is valuable for the customer. But for niche items like lamps, there is no way for the customer to know the actual price, So it is possible for some vendors to just hike up the price by 50% and then give a discount of 20%

3) Marketing Ploy : Indians love discounts and it is usually a great marketing ploy. However, consider the high customer acquisition costs, we think it is more important to get the trust of a customer for repeat purchases or referrals than trick him or her for a quick sale.

Based on the above, we have decided on a no discount policy for single purchases. Its been a tough one and once in a while, we may re-look at things like seasonal or inventory based discounts, but we would rather give a very low price than a hiked price with a discount. Lets see how it goes

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