Discounting, Price Elasticity and Quality Signalling in the Indian Apparel Industry Within 2022

This study examines how discounting strategies in the Indian online apparel market in 2022 reflect underlying economic behaviour, particularly price elasticity and quality signalling, and whether discounts and non-price signals influence consumer purchasing decisions. Using a dataset of 179,886 observations, the paper investigates two key questions: whether basic everyday apparel items receive larger discounts than occasion-wear, consistent with price elasticity theory, and whether consumer star ratings function as quality signals that shape seller pricing strategies. Employing regression analysis with progressive controls for platform, brand positioning, and price levels, the findings indicate that everyday apparel items receive significantly larger discounts once structural factors are accounted for, suggesting that firms perceive these products as more price-elastic. In contrast, premium brands rely less on discounting due to stronger reputational capital. Contrary to expectations, higher-rated products are associated with larger discounts, implying that firms combine quality signalling with promotional strategies rather than substituting one for the other. Overall, the results highlight that discounting behaviour in online apparel markets is driven by a complex interaction of product type, brand positioning, platform dynamics, and consumer-generated signals.