E-commerce players to clock a 23% increase in GMV; to cross $9 billion this festive season

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October 05, 2021 7:59 AM

According to industry estimates, E-commerce firms are expected to rake GMV worth $4.8 billion in the first week of the festive season

Along with onboarding new shoppers, E-commerce platforms will aim at getting back users who have been dormant shoppers.

And the festivities have begun and so have the discounts. Walmart owned Flipkart has rolled out its Big Billion Days sales from October 3- 10, while its archrival Amazon’s month-long Great Indian Festival started on the same day. Last year, E-commerce players clocked $7.4 billion worth of gross merchandise value (GMV) during the festive month, according to data released by research firm RedSeer. With an increase of 23%, GMV is expected to cross $9 billion this year. In addition, the festive sales GMV is estimated to touch $4.8 billion in the first week itself. 

Analysts believe that the gross sales will go up this year largely due to market sentiments returning. Along with onboarding new shoppers, E-commerce platforms will aim at getting back users who have been dormant shoppers. “With work-from-home experience stabilising, the purchase pattern has evolved. After a number of people lost their jobs during the earlier part of the pandemic, many of them have got their jobs back. Hence, overall growth momentum is definitely expected to be higher this festive season,” Sreedhar Prasad, Internet business expert, said.

Vivek Durai, product strategist and former entrepreneur, who also believes the sentiment is much more positive this year, highlights a couple of other factors. Economic stimulus announced by the government post second-wave has boosted the economy and consumers have more money to spend. As hiring in India is rising again, the market is opening up new opportunities for professionals resulting in more certainty of future income. In addition, the pent-up demand could also boost sales as a large number of consumers held off on purchases last year. Most importantly, the fear of the pandemic affecting businesses is receding, Durai noted. 

The competition in the Indian E-commerce space spiced up lately with the entry of more deep-pocket players including major Indian conglomerates such as Reliance, Tata Group, among others. Hence, Durai thinks there will be an influx of many new shoppers because of the new platforms as well.

According to a recent report launched by MMA – mobile marketing research firm, GroupM and Amazon Advertising, 45% consumers are likely to increase their festive spends this year, while only 16% are likely to reduce. Another survey from InMobi indicates 68% of Indians plan to shop online this festive season, with 43% increasing their online shopping budgets. 

“The customers continue to believe that online shopping is the safest way to shop which has been reflected in all the recent events of Amazon like Prime Day 2021, Great Freedom Festival, Rakhi Store, Onam store and so on. This festive season is not a normal one for reasons we all know and we will continue to focus on how we can make our sellers successful; customers can look forward to shopping from a wide selection of products across categories like home and kitchen, fashion and beauty, appliances and smartphones, grocery essentials and more from the comfort and safety of their homes,” an Amazon spokesperson said.

Interestingly, Bengaluru, Delhi and Mumbai, which were bigger markets in the pre-pandemic period, would not account for a big chunk of the pie this year, as per Prasad. As a number of migrant professionals have gone back to their hometowns, high uptake will be noticed in tier-2 towns.  

The RedSeer report further added tier 2 shoppers would continue to drive the growth as they would account for 55-60% of the base. However, as offline retail and mobility continues to recover almost upto pre-covid levels, this trend may impact the online festive sale, the report added.

Category wise, mobile is expected to dominate festive sales thanks to new launches. Apart from that, other electronics will continue to see a high demand. Furthermore, fashion as a category will witness a steady recovery.

With the beginning of the festive season, the B2B E-commerce players have begun to play catch up. B2B E-commerce player Udaan has its  ‘Mega Bharat Sale’ to offer savings and discounts for small retailers and kirana shops. The sale will run from October 6 to October 12 on the platform. It has claimed to partner with over 100 brands for the second edition of Mega Bharat Sale, while the first edition saw over 80% participation from small retailers and kirana stores on its platform, as per an official statement.

However, as the third wave of Covid19 threat looms in India, it can have an adverse impact on consumer sentiment if cases go up by November, end. According to Prasad, it would be a very neutral festive season in that circumstance because delivery logistics, as well as buying decisions of consumers, would be affected.

Read Also: As digital currency picks up pace Cryptocurrency platforms to spend Rs 150 – 180 crore in advertising and marketing in FY22

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