Snapdeal Cutting Margins Could Prove Beneficial For Buyers The move is great for customers & proves Snapdeal is losing
By Rustam Singh
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In e-commerce platforms, the competition is fierce and profit margins are thinner. Every giant wasn't to capture the multi-crore market and lead the world to top the best available product at the best available price. Sometimes however, the cushion of a funding bubble bursts aiding the collapse of many e-commerce's jaw dropping prices. Marketers have long understood the fickle mindedness of India shoppers and customers – at the end of the day, majority consumers only remain loyal because of their prices to several brands. Once the initial discounts wear off, so does the customer database and thus further funding. In the same pickle, Snapdeal sliced a chunk of the commission it charges sellers' to increase sales after a slow down after gaining a lot of momentum earlier. The move is the first by any Indian e-commerce company.
In an email sent to some sellers, Snapdeal has explained how lowering their commissions would enable lowering the total price to customers, thus increasing the chances of sales. Currently implemented only on certain products, the move will eventually trickle to all categories of products.
The New Delhi-based company, in a fierce battle with Amazon and Flipkart for supremacy in the Indian e-commerce space, wants the sellers to pass on the benefits to buyers in the form of lower prices, hoping that would attract more to shop on the portal.
Contractually speaking, Snapdeal can reduce or increase the commission on any seller or product it wants to. It is calculated on the basis of what is called "eligibility basis seller rating & fulfillment mode", and many won't qualify for the lower fee under this. Snapdeal is furiously rivaling with international giants such as Amazon India, eBay and India's very own Flipkart. Ironically, all three portals carry almost the same services and goods, with barely nay difference in prices, yet loyalties of customers make them stay.
Snapdeal raised only 90% growth from last year as compared to last year, where it raised four times the amount. What differences do you find in Flipkart, Amazon, eBay and Snapdeal? Let us know in the comments on our official Facebook page Entrepreneur India
