Online shopping business is now a very competing business where new online stores come with new offers and discounts. So to keep their customers, companies give regular discount coupons for their users. It doesn’t mean they are selling it at loss. They are just taking less profit from them. These days it’s increased only because each and every online shopping portal has cash-on-delivery options. If not most of us find it hard to pay money before the product is delivered as we don’t see the product personally apart from images shown by the seller. And coming to discounts seller does not have any expenses that a retailer would have like to maintain the store and other misc expenses.
The vendor supplies to them at good discounts. For vendors, it’s branding, marketing, and increased sales opportunity. And it should not come as a surprise that discounts lure customers and hence logically increases sales. Increased sales lead to repeat orders to vendors. It’s a cycle. Vendors see good sales with the websites so they try to push it more by providing further discounts. Then, there are advertisements on their homepages and other branding schemes like mailers, etc. for which these websites approach the vendors to contribute for the same. The e-commerce companies just need to sell at the prices were they able to get there – logistics cost + operation cost + a little margin.
Here are few points which explain the benefits of offers and discounts you often get on online shopping sites.
- Benefits people working in a local electronic outlet- Employees can take the day off and find another job because they know their manager won’t be concerned about their sales figures on the day the e-commerce site is offering the discounts.
- Convenient for Customers- Costumers can purchase things at very cheap prices, and have them delivered to their doorstep. If they don’t like what they purchased, they can often return it and get a refund as soon as possible.
- Offers great discounts on their application– In a bid to tap both existing and new customers, coupled with the fact that most of the reach and revenues of e-commerce companies will come from mobile-only users in the near future. Online shopping portals are not only equipping themselves with mobile apps but are also offering exclusive deals and discounts to users of the platform.
- Helps to retain themselves in the competition– And also many other e-commerce sites like flipkart offers many discount offers and deals on its mobile app. Also, a recent report by the Boston Consulting Group, a global management consulting firm, notes that, at present, around 45% of online consumers in the country use only their mobile devices to access the internet. This is expected to increase to 60% over the next three years. So that’s the reason they are trying to tap more customers to use their mobile app.
- Decreases their expenses– Starting an e-commerce business is much cheaper than building and running brick-and-mortar stores. You need to take into account that by operating online, these stores do away with the need to work with middlemen who often increase the overhead costs of offline retailers, making it easier for them to make profits. Thus, due to the comparably little expenses incurred, online stores are able to lower their prices substantially.
- Increment in sales- Due to the larger reach of online stores, they can lower their prices and still make profits because of the higher volume of purchases. But for offline retailers, don’t have the same level of sales that online stores have, hence are forced to increase their gross profit margin. So that even if they sell less volume, the profits made can still support the business.
Most online stores use dropshipping suppliers. These are suppliers that hold and ship the stock to the online consumer directly. These suppliers relieve the need for large, expensive warehouses to keep the stock which is unavoidable for offline retailers. All these work to their advantage, enabling them to make profits even though they offer huge discounts.
- Free Marketing and Branding– Another point is branding. While we get discount coupons, we talk about this to our friends and family. From the company’s viewpoint, we are marketing their products. Here company gets free mouth to mouth advertising for their brand. There are websites listing best offers and many have a category for discount coupon codes like Flipkart sale offer. Companies give special discount coupons for such websites and those websites also drive more customers to their stores. Big discounts attract more people, and they end up moving large quantities of products, thereby making huge profits by selling large volumes with slim margins.
The e-retailers do great analysis on the present and future product sales, requirements, demands, service, customer’s likes and desires, etc in a professional manner and provide the products to the customers. They follow the directions to consumers’ shopping service method that means they provide the products directly from the manufacturing station to the customers. It leads them to sell their products at discount prices at their online stores. They provide discount offers in the form of online coupons and thus by using these coupons while shopping online, the customers can get more savings. That is why online coupons are most preferable by shopping companies and consumers.
It’s not that by giving such huge discounts on some selected items, these online portals are at a loss as they only offer discounts on the products which they got from vendors at much-discounted prices. Either due to bulk purchase or Vendor supplies it at discounted prices for its branding and marketing online. Also by giving such huge discounts they attract the customers and are establishing their customer base which can be targeted easily for sale of other products by email marketing campaigns to existing customers. Nonetheless, even when online stores incur a loss caused by the huge discounts they offer their buyers; it still works for their benefit, as they win many loyal customers that the business can rely on for future success and growth.