From long queues to pay your bills to paying these same bills online, the world has moved online in many ways. Add to the rise of e-commerce platforms ranging from Amazon to Myntra, to Ajio, among others. It is believed that the recent festive sales have been the best in terms of the number of goods sold and revenue earned by online stores. “Consumerism and premiumisation are the two big trends which emerged as customers from smaller towns flocked to these platforms. Leading the charge is the ecommerce sector with customers buying online from Amazon, Flipkart and other portals. This consumer trend is seen even in high-value purchases and signifies robust economic growth for India,” Shriram Subramanian, founder and managing director, InGovern Research Services, told BrandWagon Online.
A report by InMobi highlighted that 54% of Indian consumers preferred using hybrid shopping this festive season. However, 84% of consumers increased their budgets when it came to shopping online when compared with the previous festive season. The report also claimed that 44% of the consumers preferred shopping through online mediums only. Additionally, 66% of the consumers allocated a budget of Rs 25,000-50,000 for festive purchases.
Online versus Offline!
While over the years, the debate around online versus offline has only found more voices, this festive season, a certain section of the customer segment definitely relied on online platforms to complete their purchases. Moreover, a survey by Simpl found that two out of every five consumers had planned to buy from D2C merchants. Data further revealed that GenY and Millenials highlighted their strong preference for shopping online. As a result, 70% of D2C merchants were expecting a 2-4X increase in sales solely during the festive season. “In India, all marketplaces and e-commerce websites have their own set of loyal customers for electronics, fashion, and beauty. Competitive pricing and frequent discounts during sales, such as the Great Indian Festival and Big Billion Days, make these platforms attractive for budget-conscious shoppers. Moreover, e-commerce platforms have reliable delivery services, ensuring timely and secure product arrivals,” Anurag Kedia, co-founder, Pilgrim, explained.
Moreover, industry experts opine that while customers are naturally drawn to the best offers during regular sales, this tendency intensifies during festive sales. “The festive period is characterised by a heightened focus on gift-giving, prompting consumers to actively seek bulk deals and attractive offers,” Bala Sarda, CEO and founder, VAHDAM India, added.
The ROI
To be sure, the percentage of revenue generated from offline and online platforms has changed due to the increasing focus on online sales. The gross merchandise value (GMV) for the entire festive month for India eTailing is said to have touched Rs 90,000 crore, up 18-20% from last year’s festive month sales, as per data released by Redseer Consulting, a market research firm. This was driven by about 140 million shoppers who had transacted online at least once during this festive month. “Over the last several quarters, we have seen enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification. Continuing with this trend, we expect increasing GMV contributions from non-electronics categories like Fashion, BPC, Home and General Merchandise and more this festive period,” Mrigank Gutgutia, partner, Redseer Strategy Consultants, said.
The market research firm further stated that direct-to-consumer (D2C) brands were more prominent this festive season. As a result, in the long run, D2C brands are expected to grow 1.6x as fast as the broader eTailing market (CAGR 2022-27). For Pilgrim, a digital native skincare brand, 20% of the sales are generated through offline channels, while online accounts for 80% of the revenue. Within this, the company website accounts for 40% and the remaining 40% comes from marketplaces. “The multi-channel approach enhances our market reach and accessibility. Interestingly, our sales distribution showcases a balanced outreach strategy, with 35% coming from the top 10 cities, emphasising success in tapping into the vast potential of tier-I, II, and III cities and towns. The geographic diversification broadens our customer base and aligns with the growing e-commerce trends in smaller cities and towns,” Kedia added.
Meanwhile, VADHAM India, a D2C tea brand, derives the majority of its revenue from online medium, particularly from the website and then followed by Amazon. “Since the launch of our TEA ROOM store, we have seen early signs of the scales potentially tipping,” Sarda said.
For Fedus, a networking accessories brand, the revenue is predominantly generated online, accounting for over 80%, while offline platforms contribute to around 20%. “Online platforms allow customers easy access to various brands, products, and services and reviews from other users, providing them the ability to compare all features before making a final decision,” Sachin Verma, founder, Fedus, noted.
Sale-fool impact!
One of the key reasons behind the growth of online is heavy discounting. In terms of city-tier-wise growth, metros have been growing faster than tier 1 and tier 2 cities in the last few quarters (10%+ for metros vs ~8% for other city tiers). However, robust growth across city tiers has been recorded this festive season. “Festive sales drive website traffic up to 3X the usual rate. Interestingly, despite the surge in website traffic, most orders are still placed through Amazon due to its perceived reliability. The anticipation for these sales begins a month prior, with customers researching and shortlisting products,” Verma, said.
Not to mention, all major e-commerce players had their discounts and offers running including The Great Indian Festival by Amazon and Big Billion Days by Flipkart. Additionally, competitive pricing and attractive advertising of such sales played a crucial role in attracting the consumer’s attention. “Competitive pricing and appealing offers need to be planned carefully as consumers are accessing a variety of online platforms. This combination leads to a substantial rise in overall revenue as well as increased consumer spending and an overall feeling of urgency and enthusiasm in the digital environment,” Agarwal opined.