GST 2.0 reforms push festive ecommerce sales higher

Consumer behaviour this season reflects a bullish sentiment, fuelled by GST-enabled price reductions that have lowered costs in high-ticket categories such as electronics and pushed festive demand up 23-25% across metropolitan and emerging markets.

The GST reforms, effective from September 22—the first day of Navratri—reduced tax rates in several high-demand categories, including large-screen TVs, mid-range fashion and furniture, providing direct price benefits to consumers.

These changes have not only lowered retail prices but also encouraged shoppers to look beyond tactical discount-hunting towards more aspirational purchases, lifting participation from Tier II and III cities and stimulating growth in discretionary spending.

According to market research firm Redseer, the reduction of GST on large TVs from 28 to 18% led to a 6-8% fall in retail prices, boosting demand for premium models.

Fashion items priced below Rs 2,500 now attract just 5% GST, encouraging mid-market apparel purchases, while furniture, now also taxed at 5%, has shifted from wishlists to shopping carts.

"First 2 days sales surged by 23-25% year-on-year, marking a four-to-fivefold jump in growth over last year's muted start. The twin forces of GST 2.0 reforms and festive sentiment powered a wave of premium smartphone and TV purchases, with loyalty members driving record demand.

"For the first time in years, India's festive ecommerce season is not just about deals, it's about policy shifts, consumer confidence, and platforms vying to capture the premium basket.

"User feedback suggested that demand was so strong that some apps even faced massive slowness and crashed within minutes of trying to place orders, suggesting positive sentiment of users to spend and grab flash deals and early-bird discounts," Redseer said.

Ecommerce major Amazon reported over 38 crore customer visits in the first two days of its festive sale, marking its biggest-ever seasonal start, with more than 70% of traffic coming from outside the top nine metros.

Sales growth was particularly visible in categories such as smartphones, appliances, fashion and wellness products, with premium items like QLED and Mini-LED TVs, advanced washing machines and flagship smartphones seeing robust demand.

Small and medium businesses (SMBs), especially from Tier II and III cities, accounted for significant sales momentum, with over 16,000 SMBs tripling their sales compared to an average day, Amazon said.

"The #GSTBachatUtsav initiative has been incredibly well-received, with sellers passing on GST benefits worth crores in just 48 hours through our dedicated storefront featuring home appliances, electronics, daily essentials, healthcare, fashion, and more. We're humbled to see strong business growth for lakhs of sellers across the country, from small businesses and local artisans to made-in-India brands," said Saurabh Srivastava, Vice President, Amazon India.

Flipkart reported a 21% increase in user visits during the first 48 hours of its festive sale compared with last year, attributing the rise largely to the GST 2.0 reforms.

Categories such as mobiles, TVs and refrigerators recorded a 26% year-on-year jump in demand. Growth was seen not only in the metros but also in cities like Indore, Surat, and Varanasi, indicating deeper penetration into non-traditional markets.

Snapdeal, too, observed sharp momentum in fashion, with the category doubling year-on-year and seasonal apparel soaring nearly fivefold. Festive gifting segments such as serveware recorded even sharper surges of around 350%.

"We believe the recent GST changes have also played a definitive role in shaping consumer choices. Categories like apparel and footwear, which have benefited from reduced GST rates, are seeing stronger traction in the ongoing sale. We see a bullish consumer sentiment, buoyed by festive offers and lower prices due to GST-led price reductions," Snapdeal CEO Achint Setia said.