Ankita Rai, Financial Express
\nNew Delhi, 25 September 2016<\/i><\/p>\n
![\"\"](\"https:\/\/www.thirdeyesight.in\/wp-content\/uploads\/2022\/09\/etailers-services.jpg\")
The\nupcoming festive season has e-tailers gearing up with a unique\nstrategy: That of focusing on premium services to build up the\nmomentum. The coming festive season is no longer just about discounts\nand deals, but also about which player succeeds in roping in the\nmaximum customers towards its platform. <\/p>
No wonder that the\nlaunch of Amazon Prime in July saw similar competitive offerings from\nboth Flipkart and Snapdeal, aimed at improving customer stickiness and\nreducing re-acquisition costs for lapsed customers. But remember that\nFlipkart First was the first mover in India in the premium loyalty\nservices space, which didn’t find many takers.
By launching\nAmazon Prime ahead of the festive season, with a free 60-day trial,\nAmazon is looking to convince shoppers to try its premium membership\nprogramme. The reason: Customers who choose to subscribe to Prime at\nthe end of the trial period will stay with the retailer beyond the\nDiwali sale. Also, it generates valuable customer data, which it can\nuse to attract customers back. Industry experts think what works for\nAmazon in the US and other markets may not be true for India, at least\nfor now, as Indians are still used to the idea of free shipping.
“For\ndiscount hunters, subscription doesn’t work. However, over the last two\nyears, a premium segment of online shoppers has emerged, which\nappreciates good experiences and is ready to pay for them,” says\nMrigank Gutgutia, engagement manager, RedSeer Consulting. “The premium\none-day and two-day deliveries are around 5-10% of the total orders in\ne-commerce and a subscription service like Amazon Prime is likely to be\nrestricted to this small subset of online shoppers — possibly only the\ntop 5%.”
However, there is a catch here. “In\nIndia, the number of customers who subscribe to such services will be\nsmall, but the value per customer will be high,” points out Devangshu\nDutta, chief executive, Third Eyesight.<\/span>
Globally,\nsubscription-based e-commerce services offer the customer increased\nvalue in one or multiple forms such as faster deliveries, assured\navailability, free content, etc, and charge the customer a fixed annual\nfee for the same. But Flipkart Assured and Snapdeal Gold are offering\nsuch services for free, with no aim of monetising them later. “Customer\nacquisition is expensive. Hence, a business needs to retain its\nexisting customers to drive profitability,” says Pankaj Gupta, senior\npractice head, consumer and retail, Tata Strategic Management Group.
However,\nno matter how attractive the proposition of ‘free and fast’ shipping,\nit is not sustainable in the long run. As of now, customers see it as a\nfreebie. “The free and fast shipping proposition seems more of a\nreaction to competitive pressure. At the end of the day, you also have\nto make sure the consumer stays with you,” says Pragya Singh,\nvice-president at retail consultancy Technopak.<\/p>