Tuesday, November 22, 2011

Flipkart exits price war. Is it too soon?

Recently one of my friends (chocophilix) pointed out on twitter that the prices on Flipkart had risen. I went ahead and checked the prices of books that I have bought or want to buy and this is what I found:

 Fig: Flipkart vs Infibeam

In general I could see a 5 to 15 percent price difference of Flipkart from Infibeam. However, this price difference has been observed only in the book selling business (the first segment in which Flipkart entered). The consumer electronics business still shows a congruity in prices among the online stores.

From the time it has started marketing through television advertisements, Flipkart has become a household name. Their service is unanimously considered the best among all the online stores currently functional in India. However this price rise came as a surprise as Flipkart had just started attracting eyeballs of the non-geek India.

It would be interesting to see whether the cost conscious Indian customer be ready to pay the extra 10% for a better service. The case in discussion becomes more relevant because of the unique cash on delivery model which the Indian online retail industry has been promoting. The cash on delivery model negates the perceived risk from online shopping and obviates the need for better service.

Is it too soon for Flipkart to end the price war? Time will tell whether this is a cyclic change or a clear differentiation sought by Flipkart. Looking forward to your comments.

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