By Sathya Ramaganapathy
IBEF projects that the Indian ecommerce market is set to become the second-largest in the world by 2034. A major fraction of ecommerce revenues each year come from the festive season, when there is a flurry of purchasing new clothes and gifts. The coronavirus pandemic and the lockdown restrictions between March and May impacted in-store shopping for brands large and small, many of which turned to ecommerce for the first time as a channel of focus. A prominent trend observed during this time was of brands opting to open their own D2C ecommerce stores, as opposed to simply selling their products on marketplaces like Amazon or Flipkart.
Despite festive celebrations being relatively lowkey this year, the Shopitimize team has observed that consumer festive spends at their clients’ D2C stores have not gone down compared to previous years. There has been, on the contrary, a significant uptick in online purchases fuelled by fears about risking infection at physical stores. The months of September, October and November, during which the festivals of Dussehra and Diwali took place, saw a major growth in site visitors and online sales. A closer look at 100+ D2C stores over the 30-day period of Diwali sales revealed some noteworthy insights.
Significant growth in online store revenues:
The D2C stores on Shopitimize with a collective customer base of nearly six million witnessed a 182% growth in sales revenue during the 2020 Diwali festive sales period. This marks a peak in the accelerated preference for online shopping that was brought on by the Covid lockdown. Moreover, online shopping is no longer just about prices and discounts. Shoppers’ needs have matured and they now care about brands and the shopping experience just as much or even more than they do the price tag. Brick-and-mortar stores are now offering more targeted experiences through their D2C stores and consumers have been swift to respond.
In previous years, there would be a last-minute rush to shop online for Dussehra and Diwali. This year, however, shoppers began browsing and buying sooner in anticipation of delayed delivery times and also as a form of recreation amidst the restrictions on socialisation. Online stores also shared festive offers sooner to increase their sales. During the 30-day Diwali sales period, there was a 484% increase in online store visitors. There was also heightened online activity and sales throughout the three-month festive period, with sales hitting a peak on 23rd October.
Early stock out:
The spike in online sales and early shopping caused many brands to run out of stocks before the festivals even began – a unique phenomenon.
High expenditure on food and beverages:
Given that festivals are all about sweets, chocolates and special meals, food and beverages accounted for the highest share of online sales at 41%. Electricals and Electronics came in second at 34%, although this was mostly owing to the higher order value per item rather than an increase in demand, which remains muted in the face of a general caution about not spending too much. In third place came fashion at 19%, fuelled by pent-up demand for new clothes and an avoidance of physical stores.
Increased average order value:
The festive season calls for indulgence, and this was reflected in the 152% revenue growth witnessed by stores in the food and beverages sector and an average order value of INR 3000. Gift boxes accounted for much of this increase in average order value as more shoppers chose to deliver gifts to friends and family they couldn’t visit physically. One constraint came in the form of fresh sweets, which have a short shelf life and are thus difficult to deliver to territories far from where the store is physically located. Fresh sweets also have a narrow target segment and thus a high acquisition cost. On the other hand, packaged sweets and savouries did booming business. Many of the clients witnessed all-time highs in per-day sales, with some crossing sales worth Rs 10 lakhs per day.
Preference for online apparel shopping:
The sector with the highest year-on-year growth was apparel and footwear, with sales going up by 400%. New-age, millennial-focused brands did especially well this season as millennials and Gen Z make up most of the online shopping customer base.
All-time high campaign performance:
Brands commenced their marketing campaigns earlier on than usual in anticipation of early demand. Strategies like focused search ads, targeting, dynamic retargeting and so on were used in conjunction with keyword optimisation with great effect, with paid search revenues increasing by 327% and organic search revenues increasing by 260%. On average, stores saw a 106% increase in the conversion ratio compared to the pre-festive period.
Opening up of international markets:
This year, many ecommerce stores expanded into international markets for the first time. Shipping and logistics partners stepped up their operations to meet the needs of the overseas buyer. In particular, the food and beverages sector were hugely popular among international customers longing for the familiar tastes of home. International orders, in fact, accounted for 30% of all orders in the segment, with the highest demand originating in the US.
The author is vice-president marketing, Shoptimize