In the traditional sense, profit is the money that a business makes after accounting for all the expenses.
Needless to say, various purchases have become deeply discounted these days, if you do put in a little effort. Groceries can be home delivered with at least 20% discount. Food can be had for free, sometimes you may even get paid to have that lunch. Drives can be taken for free. Stays during vacation are free. The list is nothing but growing.
Consumers have understood the drill. Download the app, create a new account, use a referral code, place the order with for-first-time-user-only promocode, use a wallet for payment and voila! Throw in a bit of wallet loading offers and credit card points on top of it. ‘New user’ is anyways an abused term. Wait for few months without any transaction, a miss-you-promo will be waiting in your inbox.
This post, however, is about how this is playing out at the other side of the marketplace, the service providers or the suppliers.
Continue reading “When unit economics are screwed – Effect of discounts on the suppliers of e-commerce marketplaces”