Festive Season Sales: Amazon, Flipkart Prepare For $5-Billion Face-Off
Amazon and Flipkart are going all out to make up for muted sales growth in the first half of the year.
WATCH | Amazon, Flipkart Raise The Stakes For Festive Season Sales
The Diwali festival season kicks off in days and Amazon has taken to the road.
Three trucks that can be assembled into a 1,050 square-feet mini-supermarket have left Indore, the commercial capital of Central India, displaying at least 600 products: kurtis (tunics), sofas, beds, wardrobes, microwave ovens, books, its voice-assistant enabled Alexa speakers and more. The ‘House on Wheels’ roadshow is aimed at wooing first-time shoppers as the Seattle-based retail giant hunts for the next 100 million customers in India.
The trucks will fan out to nearly 13 small towns, covering more than 6,000 kilometres, ahead of Amazon’s ‘Great Indian Festival’ starting next week as it eyes leadership over Walmart Inc.-owned Flipkart, which will launch its ‘Big Billion Days’ at the same time.
And the stakes are higher this year, according to a report by market researcher Forrester Research shared with BloombergQuint. Amazon and Flipkart will battle to garner the biggest pie of festive season sales between Sept. 25 and Oct. 29 that are expected to touch $4.8 billion.
E-commerce firms generate nearly a third of their annual sales in India during the Diwali festive season. And they are trying to attract dormant and first-time buyers by offering massive discounts, launching products and promising faster delivery.
Pinning Hopes On Festive Season Sales
Online retailers also want to make up for muted growth in the first half of the year. Consumption has been slowing down in India since the last year’s festival season, with consumers buying fewer cars and scooters, shampoos and biscuits. The economy expanded at the slowest pace in six years in the three months through June.
And while Indian e-tailers weren’t severely impacted, they weren’t immune to it either. Spending on e-commerce platforms, according to market researcher Kantar Group, fell by nearly a fifth in the first six months of 2019 over last year, with average ticket size declining 27 percent.
Online retailers may have to reduce their annual sales forecasts, according to Satish Meena, senior forecast analyst at Forrester Research. “While sales will grow this year, it isn’t what we have expected given the way e-commerce has been exploding in the country.”
The first six days of the season, Sept. 29 to Oct. 4, which will account for 80 percent of the festive sales, are crucial for Walmart-owned Flipkart and Amazon, according to Forrester. They are expected to offer massive discounts in their Big Billion Days and Great Indian Festival sales events, respectively.
Forrester said that while sales during the main festive season days nearly doubled in 2018, this year to grow 32 percent to $3.8 billion for the two retailers.
“While overall consumer spending has slowed but whatever is picking (up) is shifting online,” Meena said. “Hence you may not see big ticket-size purchase in overall spending. But the share of spending is moving online, and e-commerce firms want to grab the opportunity.”
However, Manish Tiwary, vice president at Amazon, told BloombergQuint that they aren’t seeing any slowdown—both from customer demand and from the seller’s point of view. “We continue to see more seller signups and more customers shopping.”
Preparing For The Sale
Amazon has also made other preparations ahead of the sale. It launched its largest fulfilment centre on Mumbai’s outskirts—the largest in India’s richest state, Maharashtra—and has lined up 500,000 sellers on its platform, compared with 380,000 sellers in 2018. The company claims to have over 20 million cubic feet of storage space for its sellers’ inventory. To meet rising demand, it has doubled the hiring of seasonal associates to around 90,000.
Flipkart isn’t behind. It has launched a Hindi interface to make shopping easier in smaller towns. The retail giant said it has hired over 50,000 new employees in its supply chain, logistics arm and customer support teams. The Bengaluru-based online retailer has also increased the number of indirect jobs through its seller network by 30 percent over last year to 6.5 lakh.
It has roped in leading Bollywood celebrities and cricketers, including Amitabh Bachchan, Deepika Padukone, Alia Bhatt, Virat Kohli and Mahendra Singh Dhoni, to promote its Big Billion Days sale.
Flipkart said it expanded its supply chain for large appliances to focus on smaller towns and increased its pin code coverage by 80 percent. It will push its private labels such as MarQ and furniture brand Perfect Homes. The company said it has increased its delivery capacity by 14x times this year over 2018.