Festive season to end on a high note; consumers return to e-commerce firms to spend

E-commerce players clocked a gross merchandise value of $9.2 billion this year, according to data released by research firm RedSeer.

Along with an increase in the number of shoppers, gross sales, e-commerce platforms also reported a growth in the number of sellers as well.

Festive season in India finally saw consumers loosening their purse strings, after a rather strugglesome one and a half years, due to the on-going pandemic. E-commerce players clocked a gross merchandise value of $9.2 billion this year, an increase of 23% compared to 2020, according to data released by research firm RedSeer. A number of new players joined in the Diwali festive sale and existing players scaled up their efforts to make the most. “Historically, when we look at the festive season sales, we largely end up looking at Flipkart, Amazon as the drivers of the sales. What we have seen this time is that the sale is much broader than usual. We have seen players such as Meesho, Reliance, Tata Cliq taking a greater part in the sales. As the festive sale is a flagship event, many brands have also participated more aggressively with discounts and promotions,” Ankur Pahwa, partner and national leader, e-commerce and consumer internet, EY India told BrandWagon Online.

While tier-2, tier-3 cities accounted for most of the sale this year, the sale has been much more as in the last one and a half years people have become accustomed with e-commerce channels as a source to buy. After its month-long Great Indian Festival, Amazon claimed in a blogpost that 79% of new customers came from tier 2 and 3 towns such as Ernakulam, Guntur, Patna, Krishna, Bhopal. In addition, one out of two Prime members who shopped during the festive season were from tier 2 and 3 towns, Amazon added.

During 2021 festive sales, there has been a shift in the demand of product categories as well. Among all the categories, mobile accounted for 41% of overall GMV clocked by e-commerce players this festive season, according to the RedSeer report. Considerably, the fashion category picked up momentum after a year of slow growth and accounted for 23% of overall GMV. “It is a very positive trend that fashion and apparel have picked up again. A large number of consumers held back off on such purchases last year. Apparel coming back strongly is itself an indicator that the digital economy is going in the right direction,” Sreedhar Prasad, Internet business expert, said.

In fact, the year, cash-on-delivery (CoD)has reduced significantly, especially on the back of rise of digital payments like the unified payment interfaces (UPIs). As per Prasad, this trend could benefit the e-commerce players by reducing the number of last-minute cancellations. However, Pahwa quickly pointed out that first-time buyers still rely on CoD as newer pin codes come into the e-commerce scene. “Many existing consumers have moved to prepaid payment through cards, UPI, and BNPL. The mix of COD may not have dramatically gone down but new buyers will also eventually move to prepaid once they build trust,” Pahwa added.

Along with an increase in the number of shoppers, gross sales, e-commerce platforms also reported a growth in the number of sellers as well. E-commerce shipping and enablement platform Shiprocket claims a 213% increase in terms of the percentage of first-time sellers who joined the sale in tier-3 cities. As stated by Saahil Goel, CEO and co-founder, Shiprocket, almost 47,000 new sellers from tier-3 cities joined the platform as compared to around 16,000 sellers in 2020. Tier-1 and Tier-2 cities saw an increase of 138% and 175% respectively, Goel added.

“The festive season drove robust growth opportunities for sellers and MSMEs and enabled better income and livelihoods for Flipkart’s supply chain partners including lakhs of Kiranas. In fact, Flipkart witnessed over 55% growth in new sellers this festive season, compared to 2020. Tier-2 and tier-3 experienced the highest number of seller sign-ups with 57% sellers from small cities and towns such as Jaipur, Surat, Howrah, Tirupur and Panipat, among others,” a Flipkart spokesperson said.

As per EY India’s Pahwa, enablers such as better logistics, robust distribution, financial products including buy now pay later (BNPL) also helped to drive the growth. Cloud supply chain company Prozo expanded its warehousing capacity three times this year as demand for warehousing and fulfillment solutions went up significantly, Ashvini Jakhar, founder and CEO, Prozo, claimed. The company saw a four-fold jump in its demand this year, Jakhar added.

Following a satisfactory Diwali season, many e-commerce players are now running Black Friday sales, winter sales and gearing up for Christmas sales as well. “The momentum of Diwali sales will not stay the same in December but the growth during October-November will have its spillover effects on year-ender sales as well. However, we will need to keep in mind that the new variant is also now a cause of concern in the country and that might affect shoppers’ sentiment,” an industry expert said.

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