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The Financial Express

Big sale, big profit for consumers, what’s in there for sellers?


Big sale, big profit for consumers, what’s in there for sellers?

‘No’ is perhaps the most important, and certainly the most powerful, word in any language. But there are a few things we simply cannot say no to, and sale is one of those. Even if we succeed in saying no to a sale purchase, most of the time we can barely justify our decision and keep agonising ourselves with the question, “Have I missed some good products?” It's really hard to say no to a good sale.

Once a friend of mine went to a super shop to buy cornflakes, and somehow she ended up buying a big jar of coffee and a coffee-mate along with it, simply because those were 50 per cent sales. When her mother reminded her that they don’t even drink coffee at home, she simply replied that it is profitable anyway due to a big sale. It seems lunatic, isn’t it? Actually, this behaviour is pretty normal, and can be explained.

Customer psychology works quite differently when it comes to sale. There are different types of emotional responses to a sale. Many individuals buy due to emotion over logic. Just think about your last impulsive purchase from sale. Did you really need that 7th black denim pant?  Or the leather jacket you bought when the winter had ended? Or the expensive (even after 30 per cent sale) headphone you purchased from Amazon?

There’s a high chance that you didn’t need any of these products, but you bought them anyway, because you believed you got them at a cheaper price. This is the reason why  people wait for black Friday all year long. Just like consumers, the seller also waits eagerly for events like this, just like a good player waits patiently for his opponent to make mistakes in chess.

Sale mechanism in multi-vendor online marketplaces, for instance, Daraz, Evaly, and Amazon, has conquered different dimensions in e-commerce. Daraz Pakistan recorded a revenue of Rs 3.0 billion during the Big Friday sale in 2017.  Evaly crossed Tk 1.0 billion turnover on its first anniversary through lucrative sales offers. These online commerce companies are one of the fastest growing businesses ever with sales being their core mechanism.

Aysha Siddika Asha, owner of a small online based grocery shop named ‘Ayba Layout’ has recently registered to a student entrepreneur-based multivendor website named Aladinerprodip, which has a business model similar to that of Daraz or Alibaba. This website offers lucrative sales on different occasions.

Asha mentioned that her small business got a boost with Valentine’s Day sales offer by the platform, as it received orders worth around Tk 30,000 on Valentine’s Day sale itself. However, there’s always a question that pops up in the consumers’ mind, “How does the seller adjust the profit?”

“I don’t have to adjust the cost, the website does that for me. If the price of my product is Tk 500, and it becomes Tk 350 after sale, the customer will surely pay Tk 350 for it, but I will get the full amount. Aladinerprodip, the business platform, will bear Tk 150. I don’t undergo any loss here.”

You must be wondering why the platform would bear the loss, or how they even make a profit. Well, a similar question was asked to Mr Munawwar Mahmood Chowdhury, former associate manager of marketing at Daraz BD. In response he said, “This is a simple cash burn process. We want new users and engagements and users want discounts. They get it from Daraz. Hence our target is acquired. It’s almost like spending a marketing budget.”

Cash burn is a vital process in any startup and every startup needs to spend a certain amount of money to move toward success. This is one sort of promotional activity and the goal is to draw the attention of customers/users and make them accustomed to the product/service.

If you are trying to attract a massive consumer market, no wonder you need to make a hefty investment. Obviously, the more you need to spend, the higher your burn rate will be; and for that the more money you’ll need to raise too. In other words, cash burn is a loss for the time being but beneficial in the long run for such a business.

Simple math? Doesn’t it really matter as long as the discounted amount is not going out from our pockets. As a customer, keeping aside all the discussion about how such sales empty our pockets, it always feels nice to have tempting discounts. May every Friday function as Black Friday, Amen!

Kaniz Fatema is a fourth year student of geography & environment at Dhaka University. She can be reached at [email protected]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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