Discounts Rush and Sales Fest Take Toll on Amazon, Flipkart, Paytm Bottomline

Jul. 30, 2018

There is no doubt that India’s e-commerce ecosystem is growing at a rapid pace, with global giants such as Amazon and Walmart vying to grab a piece of the pie. One of the tactics the e-commerce companies employ to lure buyers and expand their reach is discount offers, which are certainly a treat for customers, but on the flip side, these deals and sales fests are hurting the finances of the e-commerce companies operating in India.

According to a report from the Financial Express, the increasing frequency of online sales festivals and discounted deals offered by companies in same vertical are certainly helping pull in new customers, butthe industry as a whole is on a route of financial loss, despite a gain in overall revenue.Image courtesy: Financial Express

On the other hand, companies with stronger financial backing may continue to grow despite the losses, all the while planning and implementing new strategies to outmaneuver their rivals in the respective segment. But another worrying aspect is the drop in investments. As per the report, cumulative investments in e-commerce and startups recorded a sharp decline of 35.5% in the span between January and June. Also, the investments solely in the e-commerce sector went down by a hefty 624%, while monetary influx in the Fintech sector dried up by 50%.