26 September , 2022 |

Stories

The Discount Trap

Needless to say, there are a couple of friends of mine who were pretty excited about the Big Billion Days and The Great Indian Festival. And, I am damn sure most of you might have also felt excited and bought some products too. Let me tell you; this is nothing short of a "trap". Wait, how can you say that? Check out the blog to learn more :) The reality of life is that it turns out lucky to someone and a curse to another. Sometimes, a combination of both. And this concept applies to businesses in the modern era as well. For the benefit of business organisations, they lure customers with discounts and freebies. And believe me, they already went to an intolerable extent. You remember the ad for "Complan", which used to portray a kid whose parents aren't happy with his height, and later they learn about the magic drink and feed him, instantly making him taller. The "Santoor" Ad portrays beautiful moms who are unmarried models in real life. Red Bull never gave me wings (sorry, wiiiings), hands down :( It is nothing less than cheating because they are false promises (show me a guy who became fearless after having Moutain Dew). And come on, even though you shut the doors from one end, they got many ways to trick you. Don't get me wrong; I love businesses and the entrepreneurs involved in them, as they are the ones who rule the world. But the only problem is they tend to make people fall into their traps to increase sales and revenues, which is not legitimate. So what is up with the Big Billion Days and The Great Indian Festival? Reports state that these e-com giants perform the best during these sale periods. And the answer is quite apparent, the "discount trap". Someone rightly said, "we buy the things we don't need, with money we don't have, to impress people we don't like". We unintentionally build this psychology that is directly leading us to a downfall. If my neighbour bought a Mercedes, why can't I? And this directly benefits the businesses. I have seen memes on Twitter mocking these e-com giants, where the goods are sold at regular prices on special days, by displaying and striking off the fake price beside the regular price. For instance, Headphones X are sold for 1999 on normal days but are sold for 2999 1999 (33% off) during the sale.

Reality Check As you might be wondering how these giants could provide huge discounts during the sale, there is a clever strategy behind it. It was noticed that over 90% of the products were overpriced a couple of months ago and were later reduced during the sale (According to the Price Trackers). Only a few stocks are kept for a lesser price (for promotion), and the price is increased when the limit ends. And yes, the e-com platforms provide discounted prices but not the sellers. Their intention is to make you visit the website and buy something else in case you won't get the product you are looking for at a discounted price which also increases the web traffic. You might be thinking that, won't these platforms incur losses due to the heavy discounts? And the answer to this is a straight no. The reason is that they label the discount as indirect expenses, advertising expenses (Cutting down from the profits), which helps in tax redemption (Around 30%). Contrary to that, the sales growth at a 300% rate led to humongous amounts of profits. Some of the unsold goods were also sold at a discounted rate, which wouldn't have been sold otherwise. So, they win the game even if you look at any angle. Many iPhones were sold during the sale, indicating that many of us are die-hard fans of Apple and have piles of cash in our pockets. This made me understand why it is valued at more than 3 Trillion USD. Remember that you've got to buy the products during the sale only if necessary. After all, electronics or other commodities are considered liabilities as they depreciate over time due to wear and tear (Unless you make money using the products). Instead, use the money to invest in assets, like stocks, bonds, etc., which can help you make money in the long run. Or else, learn a skill, enrol for a programming language through which you can make money later. Desire is something which doesn't have any end. Check out my blog on "Desire" to learn more about it. It is tough to digest, but this is the reality you need to get yourself comfortable with.

Conclusion I wanted to let you know through this blog to make sure you use your money wisely. Don't fall for freebies; buy the products only if necessary. We often hear such advice from people around us, but only those who listen to it may supersede the latter. I hope this blog made some sense to you.

Article by Krishna Teja Reddy and Picture Sourced from Unsplash Hold on; if you loved reading this blog, then simply share it with a couple of your friends, and loved ones who you think need to know about this. You can share your feedback with us at eic@ignitingminds.in or simply comment on our website if you are reading there. It might help us in improving ourselves. Until then, this is Krishna signing off :)

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