While the e-commerce order volume went up during Q3 2020, the corresponding gross merchandise value increased only by 24 per cent because of a 5 per cent fall in the average order value.
The decline in average order value is being driven by high growth in personal care, health and pharma products.
Even as e-commerce marketplaces are fired up for round the corner festive season, it is direct-to-consumer (D2C) brands that are perhaps resonating more among customers and sellers through their own websites. Seen as a post-pandemic trend in the Indian e-commerce market, brands’ own websites have reported more than 78 per cent business growth in comparison to just 35 per cent growth they witnessed via marketplaces during the third quarter of the calendar year 2020, according to an e-commerce-trends analysis by Saas platform for the e-commerce supply chain – Unicommerce. 2020 festive season has assumed great significance for large e-commerce marketplaces such as Amazon, Flipkart, Snapdeal others as much as it has for other vertical platforms such as Nykaa, Pepperfry, Firstcry, Lenskart and more across various categories in the post-Covid period.
“Post the pandemic, D2C has emerged as the preferred choice for both sellers and consumers. Sellers now understand the importance of D2C as they need a platform to connect with consumers and consumers prefer to shop from a brand they trust,” Unicommerce said. The high growth in order volume of over 2X showed from the websites has triggered more brands to set-up their own websites. There has been nearly 51 per cent growth for the brands developing their own website in the third quarter of 2020 vis-à-vis last year, the company added.
“At the end of the day, it comes down to the customer’s cognitive satisfaction with the purchase. To compete with large players it is important to understand why a consumer should connect and how, especially when for many of them the financial situation is stressed, and each buy decision is important. Also, brands can leverage their own expenses against they pay to large aggregators,” Siba Panda, Founder & CEO, Faustus Advisory told Financial Express Online.
Ministry of Home Affairs had relaxed lockdown guidelines with the sale of non-essential goods from May 4 onwards in green and orange zones except red and containment zones. However, this was further relaxed from May 17 for e-commerce marketplaces to operate in the red zone as well, which offered much relief to Amazon, Flipkart and other e-commerce companies, that witnessed subdued business during the Covid-induced lockdown period.
“The marketplaces have too much choice with similar tall claims thus making it impossible to select a credible vendor. Own brand websites help the customers bank on the brand value created over years and put a face to the brand in many cases. I see this as a growing trend and as the CFO to multiple start-ups, I will advise my founders to double down on the e-commerce enablement of their websites along with investment in building their public brand,” Panda added.
Overall, pent up demand in e-commerce has continued to drive growth in orders. The sector saw 31 per cent order volume growth during Q3 2020 from the year-ago period. “The e-commerce industry is growing faster than anticipated and has already shown 1.5X growth compared to last year,” Unicommerce said. While the order volume went up during the said quarter, the corresponding gross merchandise value increased only by 24 per cent because of a 5 per cent fall in the average order value, the analysis noted. Moreover, consumers are getting value-conscious and ordering lesser value products. The decline in average order value is being driven by high growth in personal care, health and pharma products.
The quarter also witnessed a decline in return orders with around 22 per cent dip in returns per forward order. This is “probably indicative of a maturing e-commerce ecosystem. Companies are deploying technology solutions to ensure error-free order deliveries.” Fashion & accessories and personal care saw the biggest decline of around 30 per cent in return orders. “With the increasing focus of companies on investing in online channels and rising interest in adopting technology solutions to improve business operations, we firmly believe this growth momentum will continue for the next few quarters,” said Kapil Makhija, CEO Unicommerce.