I have always wondered a few actions of E-Commerce websites.
I have recently purchased products from this one website called CondomPoint.com
Besides their vaste range of products, they are offering crazy discounts.
Eg: There is a product called Kohinoor Silk Condoms which I purchased for Rs. 9 only whereas the MRP is Rs. 35. (More than 70% off)
I have purchased the same in Bulk and I’m sure there will be many people who would do the same.
One more point to Add here, the products are all expiring post 2 years.
Till Recently, they were selling Durex at 50% off – Which I have purchased as well. Same thing with the expiry Dates.
Now, My questions are as follows:
1. How do such websites manage their expenses?
2. What is the purpose/point of running such a promotion, won’t they run into HUGE losses if they continue to sell in this manner?
2a. It would make sense if they ran a promotion on a product such as this which had an expiry of just 1 month remaining BUT what’s the point of selling at such low rates that too with an expiry of over 1-2 years??
3. What is the Ultimate purpose of such websites? Is it, Profit (long term), Sales, Customer Database or something else?
4. What is the best exit or Future for such Upcoming websites, especially for those are “Traders” – “Middlemen” and who are not manufacturers themselves ?
Daman Anand
Sakshi, basically they are looking for sales, not for profits. May be, down the line, they can pitch to investors showing sale (and not profit which is negative). That is what I can think of.
Akshat Goel
Simple.
Buy 1 get 1 free pizza is what tempts you to spend the money on that 1 pizza which you do not wish to buy..
Similarly with discount.
tanul
Discounts or Sales are an easy way to bring in new customers and loss leader pricing assuming that a user who comes in has a lifetime value that is going to pay for the costs to aquire him has been there in every industry.The reason for most Ecom companies to do this however is entirely different; most of them have valuations pressures to meet, with investors clamouring for growth, to show that they have more txns, more users, more revenue. If you bleed so be it just make sure you hit your numbers, profitability be damned.