Five e-commerce trends this festive season
The festive season is around the corner and it’s a time of celebration for retailers. This is the best opportunity for retailers to lure customers waiting for attractive offers. With online retail gradually becoming a mainstream channel, top marketplaces such as Flipkart, Amazon, ShopClues and Snapdeal have launched week-long sales.
The October-December period, which makes up almost half of online retail’s annual GMV, is famous not just for lower prices, but also for wider selection and categories. This year, the competition is tough among the market leaders who have prepared themselves for high traffic during the first five days, with ample back up in logistics and tech. Apart from gearing up for this annual festival sale, there are five e-commerce trends that cannot be ignored.
- CoD comes down: With special offers for online payments, many platforms try to gain trust among customers without CoD option. [For high ticket items things are easier. Flipkart has stated that for precious jewellery, a higher proportion of people are using pre-paid options than CoD, thanks to no-cost EMI options.] Snapdeal’s free service – Snapdeal Gold ‑ provides next-day free delivery in select areas for orders paid online. The first two days of theSnapdeal Unbox Diwali Sale has seen more than 50 percent of users pay by credit and debit cards, net banking, and FreeCharge wallet, thus availing interest-free EMIs and free shipping. (The COD component before the firm launched Snapdeal Gold was around 70 percent.)
- Services beyond products: The festive sale of 2016 is widely viewed as a battle between Flipkart and Amazon, in which the winner will emerge as the undeniable leader of online selling in India. But, e-commerce industry and media are looking at this sale as a significant moment in Snapdeal’s history too. Having partnered with Zomato, UrbanClap, Cleartrip, Redbus, and BookMyShow, Snapdeal has seen huge traffic. They claim that movie booking services witnessed a 7x surge, and 1,500 people ordered home cleaning services from Urban Clap onSnapdeal in the last few days. In addition, there was a 9x surge in Uber bookings on Snapdeal.
- Tier 2 and tier 3 cities warming up: With high speed internet spreading beyond metro cities, customers from tier 2 and 3 cities have also participated actively in online sales. ShopClues saw 153 percent increase in mobile app downloads from tier 3 cities, while Snapdeal got a 20x increase in traffic from tier 2 and 3 cities. North Eastern states also were active on both platforms. According to CashKaro, about 40 percent of participation came from Tier2, although metros and tier 1 cities continue to dominate. Amazon reported 5x growth in customer acquisition, with 70% of new customers coming from tier II and tier III geographies. A statement from the company said that the sale saw 30X increase in orders from Tier III cities.
- App traffic rises: Although online marketplaces are not keen on app-only strategies anymore, Snapdeal witnessed 82 percent of mobile phone orders this time as compared to 70 percent last year. Shopclues has also witnessed 3.5x times organic growth for android app installs and 4x times organic growth in iOS app installs. Mobile orders cover up to 40 percent for them. Flipkart, which has the highest number of app installations – 50 million – and highest number of registered users – 100 million, however, has not commented on this. Amazon also got 80% traffic on mobile.
- Discounts dip: While marketplaces are allowed 100 percent FDI, they are not allowed to influence pricings by sellers on their platform. Most online shoppers wait for festive sales to purchase high ticket items like furniture and electronic appliances. But this year only private labels are giving considerable discounts – as brands do not offer discounts below minimum operational price (MOP). This might disappoint the customer who would now tend to prefer offline options.
According to RedSeer Consulting, a research and advisory firm focussed on achieving excellence in the consumer internet market, e-tailers are likely to surpass all sales expectations in the ongoing festive sale days and for the month of October 2016 as a whole. Driven by this strong festive week performance, the industry GMV for the entire festive month of October 2016 is expected to be Rs 11,000-13,000 crore ($1.7-1.9 billion) and $20-23 billion in annualised run-rate terms. This development shows a major transformation in consumer behaviour itself – they are keen on quality, variety and reliability, as much as (if not more) on discounts. The festive sales of 2016 might just be a sign of changes to come in Indian e-commerce.