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Flipkart, Amazon, Jio Set For Record Festive Battle As Small Towns Drive Sales

The number of online shoppers is likely to nearly double as the pandemic fuels an e-commerce boom in India.

A file shot of a e-commerce company warehouse. (Photographer: Samyukta Lakshmi/Bloomberg)
A file shot of a e-commerce company warehouse. (Photographer: Samyukta Lakshmi/Bloomberg)

Online sales are expected to grow at its fastest pace in the upcoming festive season as the number of shoppers are likely to nearly double as the pandemic fuels an e-commerce boom.

Festive sales are expected to almost double to touch $7 billion in gross merchandise value, or gross sales, up from $3.8 billion in GMV clocked during the sale season last year, according to a report from internet research firm Redseer Consulting.

The number of shoppers thronging websites to buy everything from apparel to electronics is expected to nearly double from 28 million to about 50 million users in the first festive season sale. Usually e-commerce firms hold up to three sales leading to the festival of Diwali, Redseer said in a report. The first sale accounts for nearly 65% of the overall sales during the period.

Amazon holds its ‘Great Indian Festival’ and Flipkart its ‘Big Billion Days’. Among the categories that drive sales are mobiles, followed by other electronics and apparel.

The growth in smaller cities and towns is visible from the fact that while 28 million users shopped in the first sale event last year, this year roughly the same amount of shoppers have come from smaller cities alone, Mrigank Gutgutia, director e-commerce at Redseer Consulting, said.

The surge in shoppers comes as more first-time users have come online, with Covid-19 accelerating digital adoption. Of the new users, the report said, more than 50% will be coming from Tier-II and beyond locations.

“Consumers now more than ever prefer to shop in a manner that is convenient, safe and hygienic, and the e-commerce space meets these requirements,” Redseer stated in its report.

The sales comes on the back of muted growth for e-commerce last year, triggered by slowdown of consumption even before the coronavirus outbreak. Spending on e-commerce platforms, according to market researcher Kantar Group, fell by nearly a fifth in the first six months of 2019 over the previous year, with average ticket size declining 27%.

Festive season sales are crucial for e-commerce firms as they generate nearly a third of their annual sales in India. The battle till now played out between Amazon and Flipkart. This time the stakes are higher with Mukesh Ambani now challenging the two through JioMart, a combination of offline and online retail.

“Rise of Jio to likely impact the festive sales momentum—although given their limited exposure to electronics, the impact is likely to be moderate,” the Redseer report said.

While the date of the much-publicised sales event are yet to be put out, the preparation for the same have already begun. Amazon which recently announced a fulfilment centre in Bihar, plans to open 10 before the festive season.