Brick-and-mortar retailers are not willing to emulate the pricing policies of e-commerce players as they venture into the online space. Most of them are unwilling to offer steep discounts but will offer promotions to lure consumers into their own e-commerce sites.
Kishore Biyani, CEO, Future Group, is candid about his opinion on discounting as his company makes renewed efforts to enter the e-commerce sector. “We cannot afford to give discounts but there will be promotions as we will end up having adverse margins in the e-commerce business.
It has to be a real business,” he said. While the aim of Future Group’s recent tie-up with Amazon is to push sales of private labels, Biyani is reluctant to offer discounts on the Group’s websites. “There is a cost to doing e-commerce and we have already wasted enough money trying to do this business in the past through Future Bazaar,” he added. Organised retailer Shopper’s Stop is also not in a mood to offer discounts as it embarks on its omni-channel strategy.
“We will play in the online space on the strength of our brick-and-mortar brand and we expect to make money in the next three years through the omni-channel. However unlike e-commerce players, we are here to make money and will not be giving discounts but sell at full price,” says Govind Shrikhande, MD and CEO, Shopper’s Stop.
Industry observers say discounts offered by e-commerce sites in the market-place format are possible since the manufacturers themselves subsidise some products and brands.
Retailers in the consumer durable category are averse to giving discounts, despite not making much headway through their own sites.
Tie-upCroma, which recently tied up with Snapdeal, doesn’t offer any discounts on its website. It does not interfere with Snapdeal’s pricing and discount offerings.
Next Retail, a group company of Videocon Industries, is looking to tie-up with e-commerce players. Sanjay Karwa, Director, Next Retail, says e-commerce players can offer heavy discounts because they are given by the manufacturers themselves. In fact, manufactures of durable goods create special products and stock keeping units which are sold exclusively through e-commerce sites. Karwa says, “Most of the consumer durable brands have a back-to-back tie up with their manufacturers who are willing to give special discounts for e-commerce sites which are passed on to consumers.” He says brick-and-mortar retailers don’t have such tie-ups. Textile company Raymond, which recently launched Raymondnext.in believes, in parity pricing. While it has no control over pricing its ready-to-wear brands like Park Avenue and Color Plus sold on Jabong and Myntra, it is not willing to drop the prices on its own e-commerce site. “Discounts are possible by e-retailers as they sell it as a basket of products where we cannot control their pricing. In our case we will not offer discounts and there will be parity pricing between our e-commerce site and physical stores,” says Sanjay Behl, CEO, Lifestyle, Raymond.