Why some analysts believe that 2024 is the last year Amazon, Flipkart and other online stores can offer big discounts

Online marketplaces like Amazon and Flipkart are reportedly poised to outshine traditional brick-and-mortar stores in India's upcoming festive smartphone sales. Leveraging aggressive discounts and targeted marketing, these e-commerce giants are expected to capture nearly three-fifths of the smartphone market during this period. According to a report in Economic Times, "Experts believe the big guns of e-commerce will corner nearly three-fifths of the smartphone market this festive season that begins with Ganesh Chaturthi — the biggest festival in Maharashtra."

Analysts attribute this dominance to several factors. Firstly, deep discounts offered by both e-commerce platforms and smartphone manufacturers are proving irresistible to the buyers. Secondly, the ongoing tussle between retailers and brands over preferential pricing has tilted the scales in favor of online channels.

Why 2024 may be last year for deep online discounts

However, this may be the last year for such aggressive discounting. Government agencies are exploring ways to regulate deep discounts and ensure a more equitable playing field between online and offline channels. Canalys’ Sanyam Chaurasia told ET that this is the last year when the likes of Amazon and Flipkart can offer deep discounting on products. “While Amazon and Flipkart will dominate sales this festive season, government agencies are currently working on a way to rationalise deep discounting so that there is no discrepancy between channels. This could be the last year where such big discounts could be given out,” Chaurasia said.

Despite the potential regulatory changes, e-commerce platforms have already ramped up their discounting efforts. Brands are also diverting excess inventory from offline channels to online platforms, further fueling the sales surge.

While smartphone sales are expected to grow modestly compared to last year, the average selling prices are likely to increase, driven by strong demand for premium devices. Brands are focusing on offering discounts in the Rs 30,000 and above price range, where competition is intense. “The Rs 30,000 and above price bands are expected to see the greatest traction this time as that’s where most of the brands will be offering discounts. There's also much more competition in that segment this time with brands that were previously operating in the budget segment now are also a part of that segment,” said Tarun Pathak, research director, Counterpoint.

As e-commerce platforms and large-format retail stores continue to invest heavily in marketing, traditional retailers are struggling to compete during the festive season. This trend is expected to persist in the coming years, solidifying the dominance of online channels in India's smartphone market.