In recent times, Flipkart has been announcing multiple Flash sales of flagship devices from Xiami, starting with the Mi3 and now with the Redmi 1S. Competitors such as Amazon and Snapdeal have been following suit, with the net result that these websites are clogged worse than IRCTC at Tatkal time. But the brands seem to fail to contemplate the long term effect of these sales.
Firstly, this process of flash sales has logistical issues. In stock market terms, what with being oversubscribed to, people then expect instant gratification and get irritated if there are any delays in despatch . Further, the chances of cross selling/upselling is limited as people only have time to purchase the specific product. Last but not the least, customers who fail to purchase the product and face issues in accessing the website, form a negative opinion about the brand and often switch to other easily available brands (such as Motorola / Asus in this case)
Equally important is to understand the effect on the purchase behaviour of Indian consumers. Active promotion of flash sales forces consumers into a spiral of purchasing products because of a fear of not being able to get products at a later stage. This impulse/fear induced purchasing creates a certain discount mentality which means that brands will not be able to sell at higher prices ever. Further over time, the brand loses the ability to push the consumer up the value chain as the consumer is more pricing oriented than brand loyalist.
Last but not the least, the logistics of a flash sale have severe impact on customer service. Slowly brands have been building a reputation for customer service and this has been one of the reasons for customers sticking to e-commerce options. Flash sales however will lead to poorer customer service which might not help converting possible first timers .
Brands need to look at other options such as pre-registrations and/or conducting exclusive campaigns where people can opt for an early purchase with certain additional benefits or a later purchase at a discounted price. In this fashion, brands can cater to those who want to be one of the early adopters while also reaching out to the price oriented crowd. This also helps phase out logistical issues and maintain the brand image. In fact, brands can even look at engaging with customers prior to a launch with innovative campaigns which give brand loyalists and ambassadors a chance to get a sneak peek or be one of the early adopters. Such a model would also help brands reward their loyalists and convince others to put in extra effort to acquire the brand, rather than play on margins and with customer loyalty.