On unbelievable discounts

 

Discounts

The current discount mania is at times unbelievable.

My parents recently took an A/C cab costing just Rs. 115 for 10 kms. That is cheaper than the highly subsidized public transport A/C bus!

A fast food app-only store has been delivering items to my home for less than fuel+raw material costs since the last 3 months!

The question everyone asks is, how is such a low price-strategy sustainable over a long term? And customers might be benefiting, but what about others in the value chain?

  • The biggest cause is perhaps VC money. Venture capitalists and investors are pumping in money with the hope that at some point in future, these startups/companies will become profitable.
  • Or it could be that the parent company has deep enough pockets to destroy competition. Capture entire market and then raise prices.
  • A disturbing reason might be that the creators are being squeezed bone-dry. An example – farmers from surrounding villages bring vegetables to the city outskirts. Traders buy at extremely low prices and sell to people high, which are still at a discount compared to supermarkets. The only thing I can think of doing in such an instance is to make a choice with my wallet and not buy.
  • On the positive side, producers and consumers are now directly connected. This could have led to the “tata bye bye” of middle-men, and we are finally getting products and services at healthy prices. For e.g., getting flats on rent no more requires brokers.
  • Technology might have disrupted (a favorite word with everyone these days) the complete scenario, and transformed buyer-seller habits. And even if prices do increase later, no one wants to go back because of additional benefits like convenience.
  • The greatest reason to cheer however would be, if technology has actually made the entire process or supply chain efficient.

I guess this isn’t so for many of the instances we see currently, but I genuinely hope this would become the primary reason in future, and then we could whole-heartedly go for the discounts.

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6 thoughts on “On unbelievable discounts

  1. Very relevant post in the current context of online offerings. One point you missed is the service providers’ intention to use the data captured for more enhanced services later at a premium.

    Like

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