Flipkart, Amazon, Snapdeal together clock over $2.25bn GMV in a month

E-commerce growth might be the one major milestone in India’s enterprise history in the last decade. Beating all skepticism, the decade-old industry has established itself beyond metro cities — or so it seems. According to research and advisory firm RedSeer Consulting, online retailers surpassed all sales expectations during October 2016, thanks to festive season sales.

Flipkart’s Big Billion Days, Amazon’s Great Indian Festival, and Snapdeal’s Unbox Zindagi have all contributed to the total GMV of online retail, which is estimated to exceed $2.25 billion [approximately Rs 13,500 crore] for October 2016, with more than 65 million units sold for the month. In fact, Flipkart claims to have sold 15.5 million units in five days, while Amazon sold 15 million and Snapdeal sold 11 million.

RedSeer’s initial forecasts were Rs 11,000–13,000 crore for the month in online retail. But Flipkart sales alone on October 3 crossed Rs 1,400 crore — the highest in Indian history, crossing single-day sales of organised retail in India. A Livemint report had stated that Flipkart’s total revenue during October 2–6 was Rs 3000 crore.

Winning categories

The RedSeer study’s category-wise trends show that the mobile and tablet categories continued to dominate the sales and accounted for more than 50–55 percent of the GMV, while large appliances accounted for more than 10 percent of the GMV. However, FMCG and home categories also showed strong growth this festive season, thus paving the way for a greater diversification of GMV in the future.

For Flipkart,electronics, laptops, mobiles, and large appliances were in high demand due to features like product exchange and no-cost EMI. Their biggest rival Amazon sold 7x more large appliances during October 1–6 than on a regular day.

Marketing and mobile take the credit

According to a recent study by TAM Media research, Amazon spent the most on advertising this year, while ShopClues spends 40 percent of its budget on digital marketing. Flipkart claims to have spent only a third of what competitors spent this year. According to the TAM study, last year too, Amazon spent Rs 224 crore on advertising during festive sales whereas Flipkart spent Rs 70 crore.

Anil Kumar, CEO, RedSeer Consulting said, “More than the GMV growth, the crucial development for the industry was that the growth came on the back of much lower marketing spends [compared to] last year, and the category mix also showed signs of moving away from mobiles-only dependency, both of which are very positive signs for the future of the industry.”

Discounts lead the way

As much as e-commerce players like to say that discounts are not important, they don’t seem to be avoiding this burden completely. For instance, Snapdeal offered up to 70 percent discounts on major mobile, electronics, home, and fashion brands. An additional 20 percent instant discount on all orders was given for payments above Rs 1,000 done through Citibank cards (up to Rs 2,000 of discounts per card).

Despite DIPP regulations on pricing, e-commerce players seem hell-bent on maximising their sales, and in multiple ways. ShopClues provided a 10 percent additional discount through its partnership with ICICI Bank, Standard Chartered, and American Express, and a 10 percent cashback on MobiKwik. Flipkart and Snapdeal also gave interest-free EMIs from Bajaj Finserv for products worth Rs 5,000 and above. The former also tied up with SBI, and Amazon with HDFC, for extra discounts on their credit cards.

That time of the year

Experts agree that the October–December period sees 40–45 percent of annual retail, of which the online channel’s contribution is as little as one percent. Since e-commerce is estimated to be growing at 30–40 percent annually, experts believe the online market will get a larger share of consumer spending.

The festive season sales surely seem to support these theories. The RedSeer study says that the annualised GMV run rate for the whole October–December 2016 quarter is likely to be $20 billion. With initiatives like Digital India taking the internet to a wider audience, e-commerce is surely getting a boost.