Online discounts: Real deal or illusion?

Take a look back at the past 2-3 years and you will see how the e-commerce industry has proliferated. Earlier this week, we saw the repetitive digits in the form of 12/12/12, which we will never see again unless one of us happens to live for another 89 years. The day was marked by a shopping extravaganza across the web and there were some lucrative deals with eye-catching discount figures. We love discounts, don’t we? Walk past a lane of shops and the one with hoardings claiming ‘Sale’ and ‘Discounts’ will be the first to attract us. A similar scene was online, when Indian sites literally wowed us by offering discounts up to 80 percent. Having said that, there is a common notion that online retailers offer lucrative discounts compared to offline retailers. While shopping online is convenient, some of us are still left with niggling doubt as to whether we would have got a better deal offline. The only solution is to research before buying, visit as many local retailers and repeat the exercise by browsing as many sites for the price of the gadget you are lusting after. But seriously, who’s got that much time? So, we decided to do some snooping around in a bid to find out the truth behind the huge discount figures. To find this out, we spoke to a bunch of offline retailers and a few who own both a local store and a website.

Most of us weigh a discount depending upon the number that tags along with the percentage,10 percent sounds good, 20 percent would be better and 30 percent sounds just great. However, some retailers point out that the discount offered is on the M.R.P. and not on the actual cost. Sometimes, it is an older M.R.P and so the discounted number is even higher. Vikram, a retailer at Crawford market  said, “Online discounts are offered by showing consumers a discount on the M.R.P and not on the street price. Sometimes it is an older M.R.P even when the price of the device is slashed. There is not much difference in the discounted prices at which these online retailers sell devices and the price at which they are available in the market. In fact, you may get these devices a little cheaper in the market.” 

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Dilip, a retailer at Lamington road sings to a similar tune, “Online sites give you discount on the M.R.P. and not on the actual cost of the device. So, at the end if you buy a product online it will be the same price at most of the shops in the market. In fact, a little expensive than Lamington road. Moreover, sometimes you have even to pay the delivery charges which is extra. The only advantage is that the product can be ordered comfortably and you get it at your doorsteps. But in case of discounts or product price, there is no much difference.”

On the other hand, a retailer from primeABGB says, “The discounts offered online are valid. We also have an online site and sometimes the discount offered on devices on the site is more than what is sold in the markets.”

Is it just a number game?

While most retailers think the discount is on M.R.P., Santosh Dhameja from Santron Computers, who owns a store as well as an online site, has a better explanation for this, “Talking about discounts, yes, sometimes online sites do give big discounts. However, all this depends upon the product being sold. The discounts are calculated on M.R.P. and sound bigger than they are. But devices sold at huge discounts online are usually products that are display items, outdated or unsold old / excess stock. You will not find such heavy discounts on latest or popular products. This way the user gets the device at slightly lower price and the seller can still make some profit with the outdated device, which if remains unsold, becomes dead stock."

Now, we came across the HTC Explorer on one of the renowned online sites that claims to sell it at 39 percent discount. The listed price, which we assume is an older M.R.P, is Rs. 12,990 and the site is offering the device for Rs. 7,949 after a 39 percent discount. However, the market price of the device is roughly Rs. 8,300 and the new M.R.P is Rs. 9500. There are other sites which are selling the same device without claiming any discount for around Rs. 7999. If this is to be believed, then the site is offering users probably the lowest price in the market (including online and offline retailers), but the discount offered is definitely not 39 percent; rather it is slightly less than 5 percent considering the market price.

While several online stores have been sprouting, there are many retailers who have been in the traditional business for years and don’t see a threat in pricing or rather don’t see any competition coming from online retailers. A spokesperson of a retailer chain said,”I can’t comment on online discounts and pricing. They have their funda and we have ours. We don’t have an online business and don’t wish to have one as we are doing quite well and have a busy day, almost everyday. In online, if there is a problem, you will have to follow a procedure of emails to get the device replaced. But here you can feel and see the product and in case of any problem come to us directly.”

There are others who think a mix of both worlds is necessary these days. There are different types of customers, some know exactly what they are looking for and others need guidance. For the first type, the modern online stores are a boon while those who need guidance and help at buying a product should go to a local shop instead. For the second type, the store owner has to understand the needs of the customer, explain things and so on. So, the customer doesn’t end up getting much discount because he is being given additional services. Santosh Dhameja states, “Firstly, a store has huge investment and recurring overheads compared to a website. Online sites have one time setup cost, lesser overheads as they only pay for the website maintenance, packing and shipping charges. We are in a business which has an innovation everyday, where help of an expert or consultant is necessary. The novice can approach a computer shop where he gets complete guidance on what to buy, he gets installation, support, delivery, hand-holding and he pays a price for it. The websites are self service model, meant for the pro, the so called expert, who can take decisions on what to purchase, can install and configure the device and handle post sales warranty support issues. We cater to both these sets of customers, those who we spend time on, and charge for the guidance, and those customers who save our time and effort and give us volume business.”

“I own an online store as well as a micro retail sales and service outlet. Customers have to become mature and understand that there is no FREE LUNCH!! A complimentary water-park coupon or Free cup of coffee is good enough to drown their hard earned investment,” he adds further.

CompareIndia showing prices at local shops

In a nutshell, it is important to know the type of consumer you are. If you see big discounted numbers online, they are just to attract users and you might get the same device at an almost similar price in the local market. Here, the only comfort is if you order it online, you will get the device delivered at your doorstep. However, the price bit may not be true always, as online sites sometimes offer excess/older products with big discounts so that the user gets it slightly cheap and the seller gets at least some profit before the stock turns dead. However, this could be same offline as well, and you may get a similar discount at your local store too. Considering the pace at which new iterations of devices are showing up, this may not always be bad. However, one has to be aware of fake sites and order only from the renowned ones. You can benefit from sites like CompareIndia, which let you compare prices across e-commerce sites as well as local retailers to get the best deal.

Image Credit: Getty Images

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