Is Flipkart deliberately making losses?
A recent TOI article says that Indian e-commerce is in dire need of money. Companies like Flipkart and other major ecommerce players would find it difficult to survive unless they raise about $150 million from investors in the next few months.
Flipkart began by offering great reduction in delivery time and reliability, thereby winning consumers's trust. I'm believing that they're offering offered items at heavy discounts to attract consumers and gain a market share. The company has already began increasing prices and at times has offered goods at more prices than the competition. Flipkart's also raised minimum order value to Rs. 500 from earlier Rs. 100 for free shipments.
Do you think Flipkart's is deliberately making profits now to gain market share and then increase prices later to make money from loyal customers? Is that business model sustainable?
Flipkart began by offering great reduction in delivery time and reliability, thereby winning consumers's trust. I'm believing that they're offering offered items at heavy discounts to attract consumers and gain a market share. The company has already began increasing prices and at times has offered goods at more prices than the competition. Flipkart's also raised minimum order value to Rs. 500 from earlier Rs. 100 for free shipments.
Do you think Flipkart's is deliberately making profits now to gain market share and then increase prices later to make money from loyal customers? Is that business model sustainable?
Replies
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Satya Swaroop DashWell, Thats is what most businesses do. Start with heavy discounts and promotional offers and later when the customers become hooked the prices start to escalate.
I would like to point that the before the 500 bucks, the price limit was 300 and they charged Rs. 30 for shipping anything below 300. Now though its 500 and they charge Rs. 50 for shipping. This steep rise of 20 bucks is sure to hit the customers hard. -
GurjapThe business model of raising prices at a whim does quite well in sectors where the product is a necessity, like oil or gas or power... as long as you don't over-do it and make sure competing technologies are nipped in the bud.
In case of this particular model though, there are a myriad of websites for online shopping supplying similar products. So unless flipkart buys out all their competition, in the long run it is done for. -
avii
Customers don't get hooked to an e-commerce site, they find a new one with better prices/services.Satya Swarooplater when the customers become hooked the prices start to escalate.
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