The Reality of Big Billion Days

4 Oct 2021  Read 4885 Views

“SALE! SALE! SALE!” Sounds familiar? Remember those days when companies used such hook-lines to drag our attention? Things have changed completely now. Most companies use different ways to hook us in with massive sales and discounts.

Discounts are no longer intrinsic to festivals. With biggies such as Amazon & Flipkart dipping their hands in this business, they can turn a regular day into one that is worth celebrating. Such is the power of discounts! It can make the universe a little bigger for you.

Curious about why these big giants come up with discounts & how they profit from giving us rebates? Stay tuned!

What Makes These Festive Sales So Big?

Sometimes, what you see is not what it is, and similar is the situation with discounts.

A Game of Profit

It's important to understand how the selling price is different from the Manufacturing cost.

[Profit = Selling price - Manufacturing cost (including other costs)]

Let's take an example to understand this, Suppose you purchased your favorite Jeans priced at Rs. 1,000 at a discounted price of Rs. 800; you got a discount of 20%. Woohoo!

Now, let’s see the other side of it, Suppose the manufacturing cost is Rs. 500 per pair of jeans and it is listed at Rs. 1000. So, the seller is earning a profit of 100% but due to bulk orders during the sale, the manufacturing cost is reduced to Rs. 400 per jeans and listed at the same price of Rs. 1000 but with a discount tag of 20%. Now, the selling price of your favorite jeans is Rs. 800 & the seller is still managing to get a 100% profit.

Cheeky right? Well, this is business :)

Is It Really Urgent?

“The offer ends in less than an hour.” 

“You have just an hour left to grab the next best deal, So hurry!”

The above lines are enough for you to search for that favorite piece of clothing, add it to the cart, and press the “order now”. That’s how urgency is created to make the deal more exciting. Even though the deal won't end in an hour, yet we end up thinking that it will. This urgency tactic is used throughout the year and takes new heights in festive sales.

Burn Millions to Earn Billions

Remember back in 2016, when the 4G internet was raining all over India? Everyone was in the queue to grab that SIM to experience the fastest internet. Well, JIO is the perfect example of this strategy. These big giants offer heavy discounts on products to gain more and more customers. Similarly, big companies like Amazon and Flipkart offer heavy discounts to attract new customers and activate the cravings to shop for existing customers. No doubt that these companies sell the products at a loss. But they know that once the customers get addicted to buying products from them, they (companies) will generate profit in the long run.

After all, no one does business for charity, and there is no charity without business. 

Terms & Conditions Applied*

“Buy 3 get 1 Free”

“Offer valid on the purchase of Rs. 4,999”

“Minimum purchase required”

 All of these come under specific terms & conditions, another strategy to make customers buy more and the customers always want to have something extra and end up buying 3 shirts to get the fourth one free. Thus, the “Great Indian Festival” or the “Big Billion Days” do not imply savings or earning of billions for you, but rather for the giants such as Amazon and Flipkart. It’s a legit blockbuster show for them. 

Just to give you a numerical perspective, Flipkart and Amazon swooped in approximately Rs. 26,000 crores during their flagship festive season sale events along with a 3.2X increase in digital footprint in the mobile category and recorded sales of more than 16 million products from across 40,000 brands in the year 2020. Wowzah! 

But don’t they say, “Customer is King”? So let’s see how useful these deals are for customers.

Are these sales really beneficial for customers?

We have seen how companies use unique strategies to attract customers, which raises a valid question that “Are these discounts really beneficial for us?” Well, it depends.

Confused? Let’s find the answer together.

One side of the coin

Every one of us needs different products and services in our day-to-day life, and of course, we have to pay for it. So, if we are getting our essentials at a discounted price, then why say No to it?

But before you think it’s a YES, let's see!

The other side of the coin

If you are buying something just because it is available at 90% off or because you wish to show it off, buying it makes no sense! It’s like smoking to look cool! Buying unnecessary things is a huge waste of money. So, as you are now aware of both sides of the game of Discounts, it's up to you to buy or not to buy. But do make sure you get things you really need. 

Rest is your call :)

Conclusion

We all know that “flat 60% off,” “up to 70% off,” “buy 2 get 1 free” are among the many delights we look for while shopping. Also, have you ever noticed that in reality, we have discounts all year long in the form of “End of season sale,” “Big Billion sales,” festival sales, clearance sale, the “Bonanza” sale, and what not!

The motive behind this article is to make you aware that business is not a charity and these companies might work in ways which we may or may not understand. So always remember both sides of the coin discussed above. 

Share this with a shopaholic friend of yours and let us know in the comment section about the best deal you got from these festive sales.

About the Author: Prabudh Mishra | 15 Post(s)

Prabudh Mishra is a finance and behavioral economics enthusiast. He has a sense of purpose to eliminate irrationality in human behavior while they make the most crucial financial decisions in their life.

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