Online retailers are expected to see their festive season sales rise up to 20% this year to touch a gross merchandise value (GMV) of over Rs 90,000 crore, according to market research firm Redseer Strategy Consultants.
This, according to the market research firm will be on the back of consumer spending, which is gradually normalising after three years of Covid-led disruptions.
Redseer said that this year’s festive season can potentially be the most efficient one ever in terms of margins, with evolving category mix and higher advertisements and promotion revenues.
The firm said that the sale will be driven by about 140 million online shoppers who are expected to be transacting online at least once during this festive month.
“Pre-Covid, the year-on-year growth rates of nominal private final consumption expenditure (PFCE) used to be around 8-9%. However, due to continuous external shocks like Covid-19 and Russia-Ukraine conflict, there was significant flux in the market. And in the last couple of quarters of FY23, there was material consumption slowdown due to tightening liquidity conditions,” the Redseer report said.
However, the YoY growth for PFCE has bounced back to 9% and several stabilising factors are kicking-in. “For instance, interest rates are maxing out, countries aiming to resolve the Russia-Ukraine conflict, and the Indian economic growth numbers are coming in strong. So, there are meaningful tailwinds to support a relatively strong festive period this year,” the report added.
The year 2023 marks the 10th year of Indian e-commerce festive season sales and over these years, Indian e-commerce GMV has grown about 20 times with an approximately 15 times jump in annual transacting user base, Redseer said.
In 2014, the e-commerce industry clocked a GMV of Rs 27,000 crore in the whole year and the same is expected to be approximately Rs 5.25 trillion in 2023, Redseer said.
Redseer Strategy Consultants, partner, Mrigank Gutgutia said that while electronics sell a lot in the festive period, the festive sale comparison over the last several years shows there is a clear trend of category diversification.
“Continuing with this trend, we expect increasing GMV contributions from non-electronics categories like fashion, beauty and personal care, home and general merchandise and more this festive period,” Gutgutia said.
Further, this year’s festive season will see increasing contribution from higher margin categories like beauty and personal care (BPC), home and general merchandise, fashion etc. “Also, there is persistent premiumisation leading to rising average selling prices (ASP) and increasing ads and promotion revenues will possibly make this year’s festive season the most efficient from a margin perspective,” the report noted.
It said that beyond category diversification, multiple other sub-themes are expected to play out. For example, direct-to-consumer (D2C) brands will be more prominent this festive season. “Projecting these to the long term, we expect D2C brands to grow 1.6x as fast as the broader e-tailing market (CAGR 2022-27),” Redseer said.
Additionally, new-age technology solutions like generative AI being more widely adopted in multiple use-cases during the sale period will also lead to better and novel consumer experiences and drive stronger growth momentum.