Online festive season sales to touch Rs 90,000 Cr this year: Redseer

Festive season sales this year are expected to touch Rs 90,000 crore in terms of gross merchandise value (GMV) boosted by meaningful global tailwinds, according to a report by Redseer Strategy Consultants.

Sales in 2023 will be up 18-20% from last year's festive month sales driven by about 140 million shoppers who are expected to transact online at least once during the season, the report added.

The year 2023 marks the tenth year of ecommerce festive month sales. This year, sales are likely to catalyse consumption demand as the economy emerges from the turbulence of the COVID-19 years, it noted.

"The Indian e-tailing has increasingly become the litmus test for consumer demand in India. The 10th festive season sale period is even more significant this year considering the recent slowdown in consumption and the almost three years of external shocks on the economy," the report noted.

There are two major tailwinds supporting the growth of ecommerce festive sales in India.

The year-on-year growth rates of nominal Private Final Consumption Expenditure (PFCE) in the pre-COVID-19 time used to be around 8-9%. However, continuous external shocks like the pandemic and the Russia-Ukraine conflict created significant flux in the market. In the last few quarters of FY23, consumption slowed down due to tightening liquidity conditions.

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However, the year-on-year growth for PFCE has now bounced back to 9%, which has led to the stabilisation of several factors including interest rates maxing out and countries aiming to resolve the Russia-Ukraine conflict, according to Redseer.

Beauty and personal care (BPC), home and general merchandise, and fashion are likely to contribute more to the overall GMV. The report noted that persistent premiumisation leading to rising average selling prices and increasing ads and promotion revenues will possibly make this year’s festive season the most efficient from a margin perspective.

"Over the last several quarters, we are seeing enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification," Mrigank Gutgutia, Partner at Redseer Strategy Consultants, said in a statement.

"This is good for the ecosystem as it shows consumers’ willingness to purchase multiple categories online and more brands coming to cater to their needs," he added.

Beyond category diversification, Redseer expected multiple other sub-themes to play out. For example, direct-to-consumer (D2C) brands will be more prominent this festive season which will help them grow 1.6X as fast as the broader e-tailing market in the long run, according to the report.

Redseer also expected robust growth across city tiers this festive season.

Additionally, new-age technology solutions like generative AI being more widely adopted in multiple use cases during the sale period will also lead to better and novel consumer experiences and drive stronger growth momentum.