How Amazon and Flipkart Offer Huge Discounts in Mega Sales

The Great Indian Festival on Amazon.com and the Big Billion Day on Flipkart.com are India’s largest online sales events, giving customers unbelievable savings no matter whether it’s Republic Day, Independence Day, or Diwali. Have you ever questioned, how these companies can have the funds for such a huge discount while remaining profitable?  The answer is sitting in a complex network of marketing methods, partnerships, and cost structures that benefit the platforms and vendors. The biggest losers may occasionally be the customers themselves. Let us break down this step by step.

The Sales Hype: Why Are These Mega Sales So Popular?

Amazon and Flipkart organize massive selling events like the Great Indian Festival and Big Billion Day to engage customers, create sales, and retain them. They have formulated a master plan of timing these occasions in the months before Diwali, Independence Day, and even other festivals which happen to be the most shopping periods for maximum customers.

The reduced prices during these sales are so irresistible that they are likely to implant a sensation of anxiety concerning the non-acquisition of rewarding items, that is FOMO. These sales follow massive advertising with it appearing to consumers as selling items at once in one day or at one period at extremely low prices. But beneath the discounts, there’s a lot more going on.

India’s Biggest Online Shopping Events

How Do Amazon and Flipkart Offer Huge Discounts ?

• Price Inflation Before Sales: Most of the products showcased during the various sales events have a price hike in the time just before the event takes place. When the sale starts, the prices are dropped back to their original values or only slightly below, creating an illusion of massive discounts. For example, a product worth 10,000 may have a sales price of 12,000 a month before the sales and during the sales, it is re-suited back to 9,999. 
• Vendor Support: Amazon and Flipkart negotiate with their vendors and lower the price of their products by promising more sales quantity. Vendors, mostly those holding a large stock, would not mind selling at a lower margin to clear stock. The platforms also enforce stringent pricing policies wherein vendors are encouraged or even forced to offer discounts to be positioned more prominently during the sale.
• Marketing Subsidies: Amazon and Flipkart often hold a great portion of marketing budgets to chase these events. They can absorb a part of the discounting cost as a marketing expenditure since the overflow of traffic and customer acquisition will be compensated by subsequent purchases and customer loyalty in the long term which is their long-term investment.
• Financial Partnerships: E-commerce giants often manage to provide such discounts by forming strategic financial partnerships with banks and Financial Institutions. For instance, credit card companies and banks may lure customers who opt to pay with their cards by offering certain incentives like cashback, Instant discounts,  no-cost EMIs, etc. On the other hand, these financial institutions benefit from high transaction volumes and customer data, which they can later leverage through interest rates, fees, and customer acquisition strategies from Amazon and Flipkart mega sales.
• Flash Sales & Limited: Time Offers: Another strategy is offering low margins, resulting in high volumes in a short period through limited-time deals or flash sales. Such strategies exploit the psychology of urgency for customers, who make their purchases on the spur of the moment.

How Do Amazon and Flipkart Make Money?

Despite appearing to provide massive discounts, Amazon and Flipkart operate under a strong business model that guarantees profitability, both directly and indirectly.

• Data Monetization: One of the biggest assets that Amazon and Flipkart have is the user data that they collect to create very detailed profiles of customers which they can monetize in multiple ways through targeted advertising, personalized marketing campaigns and even selling consumer data to third parties.
• Vendor Commissions: Amazon and Flipkart take commissions from sellers on every sale made through their platform. The commission varies for different categories of products and brands it can vary from 5% to as high as 30%. Even after offering discounts, they get a sizeable portion of revenue from the commission.
• Fulfillment Services: Both Amazon and Flipkart provide warehousing and logistics to their sellers through Amazon Fulfillment and Flipkart Advantage. Sellers pay a fee for using these services, as a result, Amazon and Flipkart make additional profits by improving deliveries and reducing costs for sellers.
• Advertising Revenue: During the sales events, vendors are more likely to pay for premium ad placements to gain more visibility on the platform. This leads to a surge in advertising revenue for both companies. Sellers bid for these advertising slots, driving the cost per click higher, making it a lucrative opportunity for Amazon and Flipkart to earn significant revenue.
• Financial Services: Amazon and Flipkart have also ventured into financial services, offering credit lines, co-branded credit cards, and digital wallets like Amazon Pay. These services are designed to enhance the customer’s buying experience while generating extra revenue through transaction fees and interest rates.

How Do Vendors Make Money?

While it may look like vendors are incurring losses by giving such deep discounts, many of them still manage to stay profitable through a couple of smart ways:

• Increased Sales Volume: For many sellers, the sales events are an occasion to sell out their surpluses, through selling great quantities of goods they can cover up the profit for each product, actually it is by volume that sellers may make up for discounts.
• Vendor Subsidies: In many cases, the platforms themselves offer subsidies to vendors, allowing them to reduce prices without taking a significant hit to their profit margins. Everybody wins–vendors sell more and the platform gets more attractive deals.
• Cross-Selling & Upselling: Sales events provide a perfect platform for vendors to showcase new products, innovative technologies, and services. Special offers and major discounts further attract user interest to the latest releases from their favorite brands.
• Brand Awareness: For smaller vendors and new entrants, these sales deliver a first-class chance to build brand awareness which can be converted into higher sales volumes and quality customer base in the long run.

How Customers Lose Money: The Hidden Costs

While shoppers think they’re saving big bucks, there are sneaky ways they might be losing money during these sales:

• Tricky Discounts: As we said before, the discounts often aren’t real. Stores jack up prices before the sale and then lower them during the event. This makes you think you’re getting a much better deal than you are. Many buyers don’t see through this trick and end up buying stuff they don’t need or paying more than things are worth. 
• Impulse Buying: The rush to buy created by time-limited deals and quick sales often pushes shoppers to make snap purchases. Many buy things they don’t need just because the discount looks too good to pass up. This leads to overspending and wiping out any real savings.
• No-Cost EMI: The no-cost EMI plans you see during these sales might look tempting, but they’re often just clever marketing tricks. The real price of the item has hidden interest costs baked in. What’s more, if you don’t pay an EMI on time, you could face late fees or interest charges, which can pile up and cost you more in the end.
• Low-Grade or Outdated Inventory: A lot of the items on sale at big markdowns are either older versions or low-quality products. The cheap price tag might look like a bargain, but you could end up paying more to fix or replace them down the line wiping out any money you saved at first.
• Hidden Charges: Often, stuff you buy during these sales comes with extra costs that aren’t obvious, like shipping charges pumped-up GST, or other fees. These add-ons can cut into the discount you thought you were getting.

The Psychological Game: Impulse Buying

What is Impulse Buying?

Impulse buying refers to the sudden, unplanned purchase of products due to the perceived urgency of sales offers. Sales events like Amazon’s Great Indian Festival and Flipkart’s Big Billion Day are designed to trigger this behavior through various psychological tactics like:

• Limited-Time Offers: Countdown timers on products create a feeling of urgency.
• Flash Sales: Significant discounts are available for a very brief period.
• Exclusive Offers: Highlighting items that can only be purchased during the sale, which makes shoppers feel they might miss out if they don’t act quickly (FOMO).
• Heavy Discounts on Add-On Products: Recommending complementary items (like phone cases or warranties) at checkout.

These strategies result in consumers buying items they hadn’t planned on and spending more than they initially intended.

Product	Planned Purchase Price	Sale Price	Impulse Buy Trigger	Discount (%)	Final Price After Discount	Unplanned Spend (₹)
Smart TV	₹ 30,000	₹ 29,000	Flash Sale Timer	10%	₹ 26,100	0
Home Theater System		₹ 10,000	Frequently Bought Together – Offer	15%	₹ 8,500	₹ 8,500
TV Wall Mount Bracket		₹ 2,000	Suggested Add-On	20%	₹ 1,600	₹ 1,600

Impulse Buying Table with Calculation Planned Spend: ₹30,000 for the Smart TV.

• Impulse Purchases: The customer bought a home theater system and a TV bracket that was offered as part of a “frequently bought together” promotion.
• Unplanned Spend: ₹8,500 for the home theater and ₹1,600 for the TV bracket, raising the total spend to ₹36,200, which is a 21% increase from the planned spending amount.

Impulse buying during mega sales events on Amazon and Flipkart can lead to significant unplanned spending. Time-sensitive offers, discounts and alluring add-on deals tempt shoppers and push them over their price budget. Although these purchases may appear to be a good deal at first, they can quickly add up and lead to excessive spending.

Conclusion: Who Really Wins?

Looking at the big picture, Amazon and Flipkart emerged as the main beneficiaries during these sales events. They use a mix of partnerships with vendors, money support, and an understanding of how shoppers think to make these events very profitable. Vendors also benefit from selling more items and getting their brands noticed.

For shoppers though, the “win” isn’t always sure. Some might find real bargains, but others could fall for marketing tricks pumped-up prices, or stuff they don’t need.

To wrap up, shoppers need to check things out, look at different prices, and not buy just because something’s on sale. The true price of these holiday sales might be hiding behind flashy offers.

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