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Shweta T Nanda
Shweta T Nanda


Bargaining chip


E-coupons hit a sweet spot with Indian online customers

Tulika Haldhar is on a diet these days. Determined to shed ten kilos, she is steering clear of eating out, and she is hitting the gym regularly. To resist the temptation, the 30-year-old content writer has stopped not just mall visits with friends, but also watching food shows.

However, greed gets the better of Haldhar when she bumps into discount coupons on online food ordering platform Foodpanda. “The whole process of digging out a discount e-coupon and using it to make the purchase is so interesting. It fills you with a sense of achievement, which is similar to getting a good bargain in a bazaar,” she says.

Haldhar’s story will find resonance with all those who find the fruits of discount retail therapy sweeter than shopping on full price. Thanks to Indians’ love for bargaining and discounts, couponing is fast gaining popularity among both shoppers and merchants. If shoppers equate discount coupons with the sorcerer's stone that turns luxury into necessity, online marketplaces are making the most of it to widen their client base. About 40 million consumers shopped online this year and the number is expected to grow to 65 million in a year, with better logistics, broadband and internet-ready devices, says an Assocham-PricewaterhouseCoopers study.

According to the survey on Indian Consumer Online Buying Behaviour, conducted by deals and discount provider Couponraja, usage of discount coupon codes by customers has seen a 10 per cent jump in the past four years. Percentage of users who shopped online rather than just browse products increased to 96 per cent in 2014. It was only 85 per cent in 2011. “E-commerce players have to use coupons to boost sales,” says the study.

The study identifies e-coupons as the key factor that drives users to spend higher amounts online. In 2014, about 42 per cent online shoppers spent more than Rs10,000, compared to 20.7 per cent in 2011. For the price sensitive Indian buyers' couponing proves a “potent promotional tool”, says Vikram Raizada, director (category management), of e-tailer “It allows us to reach out to a wider customer base.”

Generated by merchants, e-coupons are distributed via deals and discount providers like Freekamaal, Groupon and Coupondunia. “We work on commission basis. For instance, if a user comes and picks up a Snapdeal coupon code from our platform and makes a purchase at Snapdeal, the e-commerce platform pays us a commission,” said Rohit Chugh, CEO of Couponraja, an aggregator website of coupons and deals.

And, it is this business model that makes couponing an effective promotional tool. While television, radio or newspapers advertising requires high capital investment regardless of sales, merchants pay commission to couponing players only when sales happen. “If we are not generating sales they don’t pay us at all. That is why globally couponing is the last thing to be stopped by e-commerce sites,” says Rohan Bhargava, co-founder of Cashkaro, a platform that offers discount coupons and cash back.

Besides, lucrative discount coupons nudge a customer, who would have returned after a round of cyber-window shopping, to make a purchase decision. “And it helps merchants push product categories that are not selling so well or attract buyers right after a big sale. For example, demand of cotton kurtis drops during winters,” says Prasad Shejale, chief product officer, Couponraja.

Varun Bhojwani, a regular online shopper, is an example of this. After splurging in a recent online flash sale season, the 32-year-old marketing professional has decided not to do any shopping this month. So, he stopped checking any e-commerce portals and even curtailed his market visits. But when Cashkaro mailed him a discount coupon code offering 60 per cent rebate on Amazon coupled with a 10 per cent cash back offer, Bhojwani’s financial prudence went for a toss. And he purchased a cool pair of reflector sunglasses that he had been eyeing for long. “I firmly believe that nothing should be bought if it is not on discount. That is why it gets difficult to resist such a lucrative offer,” says Bhojwani.

While comparative pricing, discounts and convenience are popular reasons, sharing experience with others is a key reason people get addicted to online shopping, says Dr Manoj Kumar Sharma, associate professor at National Institute of Mental Health and Neuro Sciences, Bengaluru. According to a recent study conducted by Nimhans, about 4.7 per cent of female respondents and 3.5 per cent of male respondents admitted to online shopping addiction. They did acknowledge the dysfunction in family and finances and guilt generated by overspending and inability to control oneself.

So, if e-commerce player create discount coupons themselves, why don’t they distribute them on their own platform. “This is a way of segmenting the market,” says Bhargava. “Beyond their own clientele, couponing helps online merchants get their hands on our loyal customer base.”

And, couponing is here to stay, says Sameer Prawani, founder of Coupondunia, a coupon provider. “Gone are the days when availing coupons was looked down upon. In reality, these users are more tech-savvy and aware. They are part of an e-commerce portal's crème clientele that is comfortable with online shopping,” he says.

Little wonder the US-born Prawani did not think much before shifting his base to India to launch the venture in 2010. “While growing up in Boston, I used coupon codes for almost every online purchase. So, it didn’t take me much effort to realise the potential this segment holds in a consumption-driven booming market like India,” he says.

Bhargava, however, says he has concerns about the sustainability of such an expensive customer acquisition strategy. He argues that couponing segment is growing because e-commerce portals are focusing on getting people accustomed to online shopping by offering them deep discounts. “Once the focus will be on profitability, coupons will become more seasonal,” he says.

While the lucrative world of e-coupons prod you to shop unhindered, it is important to stay cautious. “You must check the credentials and trustworthiness of a deal and discount provider by checking people’s reviews, otherwise you could land in trouble,” says Parwani. “Alarm bells should ring if couponing site asks you to furnish your bank details as neither coupons nor cash back requires any financial details.”

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The Week

Topics : #business | #ecommerce

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