Will Indian ecommerce succeed in the upcoming festive season sales?

While COVID-19 has acted as a catalyst for the growth of ecommerce in India, it remains to be seen if the upcoming festive season sales will succeed or not.

Season festivities for ecommerce players like Amazon and Flipkart means online shopping bonanzas with deep discounts and a wide range of products.

While the festive season sale has always been a crucial benchmark for the economy as a whole, but this time, things are slightly different as the pandemic keeps people indoors.

COVID-19 and the subsequent lockdown, coupled with social distancing norms, have unwittingly acted as a catalyst for online shopping in India. But it remains to be seen whether the pandemic will prove to a booster or a dampener for the festive season sales.

Gearing up for the festive season

Management consulting firm RedSeer sounded very optimistic about ecommerce companies in its recent report on the forthcoming festive season sale. It projected a gross merchandise value (GMV) of $7 billion for the festive month, a 84 percent growth compared to last year’s $3.8 billion.

In fact, for just the festive days sale, RedSeer Consulting has projected a GMV of $4 billion compared to $2.7 billion in 2019.

“COVID enabled massive growth in new shoppers as consumers now more than ever prefer to shop in a manner that is convenient, safe and hygienic, and the ecommerce space meets these requirements,” RedSeer said in its report.

The offline retail segment, due to lower footfalls, has seen lower volume of business, which could prevent players in the sector from offering deep discounts to attract buyers.

All this has led to the two key players in the Indian ecommerce market – Flipkart and Amazon — to aggressively prepare themselves for the festive shopping season.

Flipkart’s Big Billion Days will begin from October 16 and end on October 21 while Amazon’s Great Indian Festival will start from October 17 (October 16 for Prime customers).

Ankur Bisen, Senior VP – Retail and Consumer Products, Technopak, says, “COVID-19 has brought a new dynamic to the ecommerce sector in India and has increased the demand for new categories, as well bought in different kind of buyers.”

Shift in key categories

For the ecommerce industry, the top selling category has always been electronics, especially mobile phones, followed by apparel. Though these still remain the dominant categories, others are emerging primarily due to COVID-19.

The best example of this is the “work from home” category of consumers shopping for products largely related to office activity like laptops, chargers, small furniture, etc.

At the same time, COVID-19 has extended the reach of the ecommerce companies who are going deeper into the “Bharat” segment to fulfil the needs of consumers, especially in making the whole shopping experience more language friendly.

RedSeer believes Bharat market could make a big difference this season. “COVID-driven massive online adoption of Bharat customers will lead to an acceleration of this theme, which will finally reach a tipping point of sorts,” it said in its report.

Hope of business revival

This year’s festive sales would also be a litmus test for the sellers on ecommerce platforms.

Flipkart Group CEO Kalyan Krishnamurthy said, “This festive event continues to focus on Flipkart’s commitment to provide value for consumers, opportunities for growth for MSMEs and sellers, and employment generation through ecommerce.”

According to Amazon India, more than 6.5 lakh sellers and over four crore products from the Small and Medium businesses (SMBs) will feature in its sale. Further, the company has also massively expanded its logistics and warehousing capabilities.

Flipkart has also expanded its kirana onboarding programme to include more than 50,000 such shops, who will, in turn, make last-mile deliveries to consumers in more than 850 cities. 

Only time will tell whether this festive season could bring back the momentum for sellers on these platforms as they have been severely impacted due to the ongoing economic slowdown.

Manish Tiwary, Vice President, Amazon India, at the launch of its festive sale event, said, Our sellers are excited and expect this to help them in accelerating their business. For our customers, our aim is to help them find everything they need during the festive season and deliver it safely to them.”

All these developments are also leading to a spurt in employment, even if it is on a temporary basis. Both Flipkart and Amazon are projecting that they would be creating jobs running into thousands during this time.

Reality check

However, amidst all this optimism, there is also the sobering reality of the downturn in the Indian economy, which has witnessed a steep fall. There is a liquidity crunch among consumers with a looming fear of job losses and a general caution to spend.

Ankur of Technopak believes that this overhang of the economy will have an effect on the ecommerce industry and adds that the quantum of online shopping is unlikely to witness an increase.

Despite this, there is optimism that consumers will come to shop online, especially with festivities around the corner.

Edited by Saheli Sen Gupta