Story Of The Week

E-Sale Week: A Showdown To Fight The Slowdown

Rs 19,000 crore Merchandise in six days! Does it sound like a piece of news, in a market facing slowdown? Definitely not, but the E-commerce market of India has achieved this figure in the much-awaited festive sale week.

The festive season for E-commerce

With GDP taking a downfall, RBI and the Government have rushed to its arsenal of monetary and fiscal policy. Rates have been going down and corporates taxes have been slashed, now the market was waiting for customers to demand, and when does an average Indian household go out and shop with family? Yes, when festivals are around the corner.

So, while the entire market was waiting to grab the opportunity created by the festive season, it was the e-commerce that became the star. Call it ‘The Big Billion Days’ or ‘The Great Indian Festival’, with robust and outstanding sales claimed by all major players of the sector, e-commerce has given a good fight to the slowdown and indeed instilled the hope of revival among all other sectors.

As festive sales hosted by the e-commerce sector ended last week, the e-tailers in India realized a record of $3 billion (about Rs 19,000 crore) of Gross Merchandise Value (GMV) from September 29 to October 4, as per RedSheer report. The e-tailers year-on-year growth in GMV during the 6-day festive week was 30%, which proved the bullish trend that the customers maintained towards online shopping during this week.

According to the report of RedSeer, when it comes to the two major players in India, Amazon, and Flipkart, it was Walmart-owned Flipkart that surpassed the Amazon’s GMV share this year holding a 60-62% standalone GMV share during the festive sales and 63% share if other entities are included (Myntra and Jabong). Meanwhile, Amazon’s GMV year-on-year growth was 22%, and its volume growth rate year-on-year was more than 30%.

If you are thinking that the sales must have been driven by customers in the metro cities of India, then you have got it wrong. This festival season sale was vehemently led by tier-2 and tier-3 cities of India. According to Flipkart, 1 in every 10 orders came from new pin codes, 50% growth has been claimed in new customers, and Flipkart has stated that they have been able to double the number of transactions in Tier3 cities as compared to last year. 

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Source: DNA India

What has led to such huge sales?

The e-commerce market was constantly preparing their plans and strategy for the festive season. There were various measures that were introduced to tempt the customers to take money out of their pockets. 

  • The concept of Value Shopping: This was a driving force for sales this year. With customers aware of the slowing economy and the need to reduce spending, they started spending on items that really had a value proposition for them. E-commerce market understood the mood of the buyers and hence made them realize that the value that they would be getting by buying the product during this week would not be attained at any other time. It was a ‘now or never’ situation, with huge discounts on essential household items to luxury items e-commerce made the offerings look extremely tempting.
  • Expansion of Credit and EMI: Amazon said there was a huge demand for the EMI scheme, especially from customers in smaller towns. Customers opting for the EMI scheme grew twelve times over an average business day and two times over last year’s sale period. Flipkart said the share of transactions via the company’s credit options increased by 70 percent. The tie-up with major banks has played a major role to attract buyers in smaller cities to go shopping online and avail the benefits.
  • Efficient Delivery and Exchange offers: The e-commerce market has consistently been working to refine its operations and inventory management, this was clearly visible during the week. Though many customers were from the tier-2 and tier-3 cities, they were provided with timely deliveries. This was coupled with many exchange offers that were lucrative enough to attract customers who were value-based and were looking for good offers.
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Source: The Economic Times

What does this signal for the Economy?

While the e-commerce market expects to make further gains with major festivals and occasions like Diwali, Christmas and New Year lined up, other sectors have also got a hope of revival due to the performance of the e-commerce market.  It is true that a small segment of Indian consumers go online for shopping, even then we can expect a change in customer sentiments which can have a positive impact on the entire economy. Understand it this way, you may not be an online customer, but when you hear the buzz that so many people have benefitted from fabulous discounts on the online platform, you may like to visit your nearby store to see if such offers are available there as well. Many times you would find attractive offers and end up buying items. 

Also, the penetration of e-commerce to smaller towns and cities and new customers gives a positive signal  to the market, as major demand dip that took place was from these regions of the country, moreover there is always a possibility of dominion effect that could lead to an increase in the positive sentiments which in turn would result in an increase in demand.

When slowdown grips an economy, it is the negative sentiments of customers that actually lead to a dip in demand and becomes fatal for the economy. The E-commerce market has used the festival season to accelerate the engine of demand among the buyers. If this brings a shift of sentiment and if other sectors work smartly to make their offerings attractive then India can slowly revive from the slowdown and establish itself on the track to achieve its target of 5 Trillion Dollar economy.

References

  1. bloombergquint
  2. business-standard
  3. enonomictimes.indiatimes
  4. livemint
  5. thehindu
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