As Amazon and Flipkart go all out for festive sales, here's how 2019 is panning out for the ecommerce industry

This festive season, RedSeer predicts ecommerce platforms such as Amazon and Flipkart will likely see a GMV spike of seven times as compared to the six times in 2018, driven by keen interest from regular urban shoppers and those from Tier II and III India.

1st Oct 2019
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The ongoing Amazon’s Great Indian Festival 2019 and Flipkart’s Big Billion Days 2019 have started with huge discounts, offers, and cashbacks on various products such as consumer electronics, home appliances, devices, apparels, cosmetics, and so on. The sales will end on October 4.


Along with Amazon and Flipkart, other ecommerce players such as Nykaa, Snapdeal, and many others, have also jumped on to the festive sales bandwagon.


YourStory brings you some industry insights, based on management consulting company RedSeer reports, to determine how this festive season is panning out for e-tailers and whether sales are better than last year.


Festive

75 Million GMV vs 45 Million GMV

In India, the ecommerce industry saw Gross Merchandise Volume (GMV) jump 77 percent year on year, more than double the expected range of 35 percent of annual average sales growth for the e-tailing industry, during the festive sale in 2018.


For this year, RedSeer predicts overall e-tailing is expected to do gross sales of $3.7 billion (Rs 24,000 crore ) between September 29 and October 4, a year-on-year growth of 60-65 percent.


Compared to the usual business, the consulting firm expects e-tailers will likely see a GMV spike of seven times on festive days as compared to the six times in 2018.


“More than 75 million gross transactions are expected over the six-day period this year vs 45 million in the 2018 festive days,” the report stated.


For the festive month (October), gross sales are expected to top $7 billion (Rs 45,000 crore) for the e-tailing industry, up by more than 60 percent, year on year.

Shoppers from Bharat

Last year saw a massive growth in online shoppers during the festive sales, up by five times, with a large chunk hailing from Bharat, or Tier II and III cities, indicating the mass appeal of the event. In 2019, the total online shoppers during the festive sale are expected to be 32 million, up by 60 percent, year on year, primarily driven by shoppers from smaller cities and regions.

 

Anil Kumar, Founder and CEO, RedSeer Consulting, says,


“Our consumer and business research and prediction modellers clearly indicate that the market is ready to grow significantly during festive days 2019. This will be driven by strong demand in shoppers, especially from Bharat. This, in turn, is enabled by multiple themes that industry has been focusing and investing on viz vernacular, credit availability, wide selection, and fast shipping. The event is likely to mark a landmark for the industry as it democratises to reach new consumer segments and new categories over next few years.”

Mobiles no longer dominate

The mobile phone category dominated the 2018 festive sales, accounting for 56 percent of sales. However, this year, consumer electronics (beyond mobiles) and fashion category are expected to drive growth for etailers. The RedSeer report said willingness among shoppers to buy mobiles was slightly lower than last year. In 2018, 28 percent respondents said they were willing to purchase mobile phones, but in 2019, 40 percent respondents said they would buy consumer electronics instead.


Given the wider trend of slowdown in mobile phone sales, RedSeer’s consumer sentiment analysis also shows that consumer electronics and fashion are preferred categories among consumers this year.


Consumer electronics, with 26 percent share of GMV, and the fashion category, with 15 percent (as compared to 13 percent in 2018), are expected to drive growth this festive season, particularly from small towns.


“Vernacular enablement is attracting many first-time aspirational customers from Bharat, especially important in a category like fashion,” the RedSeer report adds.


However, even with a slightly subdued demand, mobile phones will continue to rule the roost with new launches and higher value proposition. They are expected to net 49 percent of the GMV. Mobile phone sales growth during festive days is expected to be significantly higher, as compared to the whole year forecast of 12 percent growth during 2019.


RedSeer estimates that mobiles will sell to the tune of $1.8 billion (Rs 11,700 crore), other electronics will sell $0.9 billion (Rs 6,200 crore), while the fashion category will sell $0.55 billion (Rs 3,600 crore), this year.

Wider categories

Amazon and Flipkart have a more diversified category in the of non-mobile phone section this year. RedSeer found that there are more than 500 brands to choose from, especially in TVs and large appliances. This season, companies such as OnePlus and Xiaomi have launched their TVs, exclusively on Amazon.


The furniture category will be the surprise package with the highest growth, driven by a wide selection of private labels, with stock keeping units (SKUs) of two to five lakh along with combo and bundled offers and faster deliveries, as players are reducing the delivery time to smaller cities significantly with dedicated fulfilment centres.


Anil says,

“This year we see that e-tailers have taken a multi-pronged and very category-customised approach to drive growth across categories. We see this in examples like the extensive credit availability to drive appliances growth, strong supply chains to enable furniture growth, and widest collection of brand/labels along with vernacular to enable fashion growth.”


He added that such a category-customised approach will go a long way in enabling strong sales from the millions of first-time shoppers and increase sale values to regular shoppers, who will likely have a better quality festive shopping experience than earlier years.


(Edited by Suman Singh)





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