After a halt, the upcoming annual festive season is likely to inject the much-needed cheer back into the economy
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After a halt, the upcoming annual festive season is likely to inject the much-needed cheer back into the economy, especially on the back of e-commerce sales.
The e-commerce companies in India organise several sale events during the festive season. In anticipation of the surge in orders, logistics companies such as Ecom Express, Blue Dart and Shadowfax have started ramping up their infrastructure and hiring manpower.
The flagship sales by Amazon and Flipkart — The Great Indian Festival and Big Billion Days — are the highlights of the season and mark the onset of shopping festivities. The first event of last year’s festive sales, according to RedSeer Consulting, had raked in $2.7 billion in GMV (gross merchandise value). According to the consultancy firm, this year’s first festive sales (dates of which are currently being finalised) are likely to grow 50% year-on-year and reach $4 billion in GMV.
The logistic firm, Ecom Express, has plans to create more than 30,000 seasonal jobs, while last-mile delivery player — Shadowfax — has already onboarded 35,000 people and plans to add another 35,000. E-tailers, too, are gearing up for the sale season. Flipkart, for instance, has hired 70,000 people for its supply chain operations.
According to Manish Saigal, MD, Alvarez and Marsal India, e-commerce shipments have witnessed a revival since July and stand at 42 lakh shipments a day. “We expect a jump of 35% during the festive season and the shipments may go up to 55-60 lakh a day,” Saigal said.
Industry watchers expect that a significant share of orders this year might come from smaller towns. Similarly, RedSeer estimates that over 50% shoppers this season will be from tier II and beyond markets. “We plan to add 500 cities and be in 1,000 cities by the end of this year; most of this would be tier II, III and IV cities,” says Praharsh Chandra, co-founder and COO, Shadowfax.
Amazon, too, plans to set up 10 more fulfilment centres in India ahead of the festive season, two of which have opened in Ludhiana and Patna. Similarly, about 75% of the Ecom Express’ seasonal positions have been created in towns beyond metros. “While we have been ramping up our infrastructure in smaller towns, we have to apply data science to offer a good delivery experience,” says Siddharth Agarwal, vice-president, and head of strategy and planning, Ecom Express.
The industry is also bracing up for a surge in demand for different product categories. “We are seeing increased demand for consumer durables and electronics that enable work-from-home, such as headphones, printers, smartphones and others,” said Ketan Kulkarni, CMO and head of business development, Blue Dart.
Flipkart and Amazon together control about 55% of shipments (in volumes) in the e-commerce market. While their respective captive logistics arms Ekart and ATS manage 70% of these shipments, 30% of it is outsourced. Overall, independent logistics players have a 65% share in this market. Due to the increased demand during the festive season, both the leading marketplaces outsource a large share of their shipments. Though these companies are anticipating a massive surge in order volumes, servicing them would not be easy due to the localised lockdowns across the country.
“There has been a significant increase in operating cost of logistics players due to supply-side issues such as shortage of drivers,” said PS Easwaran, partner and leader, supply chain, Deloitte India.
Besides this, experts say higher cash on delivery (COD) orders from smaller towns might present another challenge for these companies. “Reaching these far-off areas is not easy and since customers here still like to use COD options, it adds to the problem as returns are higher on COD orders,” Saigal said.