Role of discounts/coupons in online retail

Written by: Madhur

On Oct 22nd, 2011

eCommerce market in India is booming right now. Few top reasons why this has been possible are:

  1. Increase in the Internet user base (mobile Internet usage as well as broadband penetration)
  2. Evolution of the ecosystem required for supporting online retailing (third parties providing logistics, payment options, affiliate marketing, coupons)
  3. Flurry of investment in this space. There is some good coverage here.

Each of the above points merit more than one article on their own, but in this post, we cover a small but important piece of the puzzle - third parties providing information on coupons/discounts/promotions.

People shop online for comfort, huge product selection and attractive prices. Online discounts (in the form of coupons/deals/offers) help further sweeten the deal by lowering prices even more and hence driving conversions. There are plenty of sites that provide information on the latest available discounts, some of the notable ones being: couponzguru, desidime, coupondunia. You can get many more by googling for “[retailer name] coupons”. Most of the sites have similar data as well as look and feel. But to their credit, the coupons shown on these sites do work and can result in significant savings for online shoppers in India.

We have been regularly using couponzguru for our own online shopping needs and it has saved as a bunch money in the past few months. We spoke to them recently and got some insights into the coupons business. Here are some highlights:

  1. Business model: They partner with online retailers either directly or via third party affiliate networks and get paid by sending traffic on CPA basis.
  2. Marketing: Search engines are a major source of traffic, so its important for them to follow good SEO practices including good user experience, unique content, inlinks etc. They also get traffic from social media sites like FB, twitter, etc.
  3. Data: They get their coupons/offers data directly from retailers, from promotional emails and user submitted coupons
  4. Quality: They need to make sure that they do not have spam and the coupon code that are displayed actually work.

One interesting tidbit is that Flipkart, which is the poster child of Indian eCommerce story at the moment has moved away from online coupons. They used to have an option for providing coupon code some time back, but they don’t anymore. We wonder if Flipkart actually saw any decrease in conversion because of the presence of coupon code box. One can imagine that during the checkout process when users see a space for coupon code but cannot actually find any coupons, they may abandon the transaction thinking they will buy when a coupon code is available.

In any case, Flipkart does advertise lower prices and sends timely emails highlighting offers/promotions. So one way or the other, as the competition in the online retail space heats up, online retailers will continue to provide lower and lower prices, which is good for online shoppers.

What is your take on the role of coupons/discounts in online shopping? How do you find online coupons/promotions? Any interesting experiences to share?

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2 Responses

  1. 1. Rohit said on October 23rd, 2011 at 4:42 pm

    I know this is going to sound like self-promotion, but CouponDunia is head and shoulders above the other coupon sites you mentioned. We have better features (such as verified coupons and email subscriptions to merchants) and also post the most accurate coupons and continuously re-verify them. The other coupon sites use CouponDunia as their main source.

  2. 2. Madhur said on October 23rd, 2011 at 5:33 pm

    Thanks for sharing this info Rohit. We will keep CouponDunia in mind next we look for coupons :-)

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