The worst is probably over for the e-commerce sector in India after the government further lifted the suspension of e-commerce services in the red zone on May 17, according to experts Financial Express Online spoke to. Ever since the Ministry of Home Affairs gave respite to e-commerce companies like Amazon and Walmart-owned Flipkart to deliver non-essential goods in orange and green zones earlier this month, the pent-up demand for such goods led to a surge in orders and product searches. Over more than two weeks, since the beginning of lockdown 3.0 and now in the fourth phase of the lockdown, consumers have been ordering apparel, electronics, household products, beauty, kitchen and home appliances, phone accessories etc. on Amazon, Flipkart, Snapdeal etc. This growth in online purchases will continue irrespective of the increase in the number of Covid-19 cases in India.
“This (online buying) will happen even if the Covid cases increase in India including for non-essential goods. Such products anyway don’t have sustained demand like essential goods such as grocery. So there will be sudden surge and then it will normalize whether the cases increase or not,” Arnav Gupta, an analyst at Forrester told Financial Express Online.
Amazon and Flipkart are yet to provide information around the share of red zone orders, total order volume etc. Queries were sent to both companies.
Snapdeal reported 65 per cent share of red zone orders out of the total orders it received on Monday — day one of the current lockdown. This also led to around 2.4X growth in order volume for Snapdeal during the day from the previous 15 days. “The strong resurgence of demand on day one of the expanded operations, including in red zones, reflects the massive and immediate requirements of users who have had no option to buy what they need for the last nearly two months,” Rajnish Wahi, Senior Vice President, Snapdeal had told Financial Express Online.
The revival in demand for non-essential goods has largely come from metros and Tier-I cities that are in the red zone such as Delhi, Mumbai, Bengaluru, Patna, Chandigarh, Ahmedabad, Faridabad, Indore, Pune, Ludhiana, Jaipur, Chennai, Hyderabad etc. An e-commerce seller for kitchen products told Financial Express Online that “the demand suddenly picked up from Tuesday morning. There might be a good number of orders for coming few days or weeks but only time will tell whether it will further grow from here.”
Orders for consumer electronics, kitchen & home appliances, smart devices, laptops, phone accessories, apparel and more were received by sellers on Amazon, according to an Amazon spokesperson. Coolers and ACs, clothing, grocery, health and personal care products, beauty and sports were other products that consumers are looking for. Moreover, “laptops, books, headphones and computer accessories” continued to interest customers.
“Online retail orders will go through the roof even if the Covid cases continue to increase. There is high pent-up demand. Covid has instilled trust among consumers particularly those who were inactive or hesitant to buy online due to trust issues. The change happened as they saw online delivery to be effective for medicine and grocery deliveries during current times. Those were already buying will buy more. E-retailers should indirectly thank Covid for creating much better belief among consumers in their system,” Naresh T Raisinghani, CEO and Executive Director at India division of global consulting firm BMGI told Financial Express Online.
While Forrester had predicted the demand for e-commerce goods to be tepid for the rest of the year, the revival in consumers’ interest back on the marketplaces is likely to change the overall growth prediction for e-commerce for 2020. “I don’t think that demand will be off for the entire 2020. While we had predicted that e-commerce sales for non-essential goods will be negative for the rest of 2020 but we talked to a few lenders to MSMEs in e-commerce space who are positive about the demand to return,” said Gupta. However, it will be critical for e-commerce firms to ensure their supply chain remains fully functional henceforth to meet consumer demands and get it back to the pre-Covid level.