Caveat venditor

The runaway response to the recent online mega-sales by Flipkart and its rivals Snapdeal and Amazon is good news for India’s nascent e-commerce sector; it proves that consumers are shedding their inhibitions about online transactions more quickly than anyone bargained for. Yes, in Flipkart’s case, the sale was marred by technical glitches with products quickly running out of stock and rivals stealing the show. Irate customers, vexed by their inability to log on to the site or obtain the heavily advertised discounts, have vented their ire on social media and even called for ‘regulation’ of such online retailing initiatives. While this episode will make online retailers much more aware of the risks of grave reputational damage from taking digital consumers for granted, there is no real case for regulatory intervention. After all, there is nothing legally wrong in a retailer offering discounts on a limited portion of the stock due to business exigencies. But yes, Flipkart is to be blamed for not managing its technology back-end well enough to handle the enormous traffic it generated on its big sale day.

The interesting thing is that the marketing tactics that had Flipkart’s customers up in arms are the norm in brick-and-mortar. Who hasn’t had the experience of being lured to a store by a ‘fabulous’ offer, only to find the heavily advertised product out of stock? Or that the ‘up to 70 per cent discount’ plastered on the storefront is applicable only to a couple of items on display? Traditional shoppers usually accept such experiences passively whereas online consumers are a far more vocal lot. The latter have the ability to make instant comparisons of prices and product features across sites. Social media also arms them with the platform to instantly convey their angst to thousands of prospective buyers. Given the notoriously lax service standards for most products and services in this country, it will be a refreshing change if such consumer activism forces not only online retailers, but also their traditional peers to raise their bar on customer service.

It is ironic that while online shoppers are blaming Flipkart for not offering sweeter deals, traditional retailers are accusing it of ‘predatory pricing’, as a result of the deep discounts it offers. As this debate rages, one thing that the Flipkart episode establishes is that online retailers cannot afford to take either their market share or customer loyalty for granted. Every time online shoppers log on, they have the complete flexibility to switch to a site or store that offers a better deal or shopping experience. It can’t be long before online retailers are forced, because of the long-term unsustainability of their business model and by their demanding consumers, to adopt more rational pricing policies and invest in the transaction and delivery capabilities that help retain clients.

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