The Boom Continues
Even before the onset of festivities, the value and volume of online sales have zoomed irrespective of the pandemic. In fact, e-commerce and its supporting industries like logistics have been among the biggest beneficiaries’ of lockdown. Packed with attractive offers of discounts and sales, the biggest e-commerce giants like Amazon, Flipkart, Myntra, Ajio and others claimed to have generated record online sales during the first week of October 2021.
During interactions with BW Businessworld, most of the online biggies affirmed that they were expecting bumper sales during the festive months beginning October. This confidence exuded by e-commerce players could be further validated by the latest report released by homegrown firm RedSeer, which claims that e-commerce platforms including social commerce and grocery ones, have collectively garnered US$ 2.7 billion in sales during the first few days of festive sales (October 2-5) and are poised to grow 30 per cent y-o-y to US$ 4.8 billion during the first week of the festive season.
The report estimates that over 75 per cent customers are planning to buy equivalent to or more than last year across categories like mobiles, large appliances, beauty and fashion. The report also claimed that the first four days of the festive week accounted for 57 per cent of the overall festive week sales with smartphones contributing nearly 50 per cent of gross merchandise value (GMV).
Like the past several years, Flipkart ran its Big Billion Days (BBD) event from October 3-10 that saw 55 per cent growth in new sellers as compared to last year. Amazon Great Indian Festival (GIF), a month-long initiative, also received a phenomenal response in the first week of October, the company claimed.
Nandita Sinha, Vice President – Customer and Growth, Flipkart, said, “This year’s Big Billion Days has been steeped in the spirit of revival and growth, as we saw a resurgence in consumption and a marked shift towards online shopping. E-commerce is clearly gaining increasing acceptance among the masses, and it is evident that user-friendly technical and financial constructs are helping to drive its adoption.”
Likewise, Amazon recently commissioned a study to Nielsen to gauge the expectations of its seller partners this festive season and the research indicated that one in four sellers on Amazon expect to double their business growth through festive sales this year. “We saw a 60 per cent increase in sellers who received their highest ever single day sales year-on-year on Amazon.in,” reveals Amazon India’s Vice President Manish Tiwary.
Snapdeal, India’s leading value e-commerce company shared that its overall sales volume in its first Toofani Sale of the season went up by 98 per cent compared to last year and buyers from smaller cities are spending 74 per cent more than last year. “We concluded our first sale of the festive season on October 10 and our analysis shows that this season sales in men’s, women’s and kids’ apparel are trending at 224 per cent of last year, while home and kitchen continues to be another strong performer with more than 95 per cent growth over last year’s festive sales,” reveals a Snapdeal spokesperson.
CashKaro, which offers virtual cashback and coupons, also saw its users flocking in big numbers on its website. This has further led to an 8x jump in traffic in just the first two days of festive sales compared to normal. Its sales also shot up by 5x. “Consumer sentiment over the last year has shifted from offline to online shopping and this reflects in the growth of e-commerce and the emergence of D2C (direct to consumer) brands in India. We expect this momentum to continue for the next phase of the sale which will be more focused on beauty, fashion and lifestyle,” reveals Swati Bhargava, Co-founder, CashKaro and EarnKaro.
Interpreting Numbers
Commenting on the festive sale, Ujjwal Chaudhry, Associate Partner at RedSeer, says, “With the festive sales lasting longer than last year (nine days compared to seven days) – we are observing the customer demand being more spread out across the period than being concentrated in the first half of the festive week. We witness strong bullishness in sellers towards online festive sales as around 80 per cent of them believe that the festive sales will enable them to drive strong sales growth and make up for the losses during the Covid period.”
RedSeer had earlier said that the platforms will clock over $9 billion GMV during the festive season which is a growth of 23 per cent. Buy Now Pay Later schemes are expected to continue to play a key role in contributing to enhanced sales. BNPL accounted for around 4-7 per cent of sales last year but is well-poised to command a higher share i.e. 10-15 per cent of sales this year, as per RedSeer’s current report. Another research and advisory company Forrester expects online retailers in India to generate about $9.2 billion in sales during the 2021 festive month, up 42 per cent year-on-year from its estimate of $6.5 billion festive month sales during 2020.
Hiring Mode Unabated
Not only is the e-commerce industry a direct contributor to the economy’s recovery but it is also a huge enabler for a host of other businesses including warehousing and real estate, transport and logistics, food and hospitality, healthcare, among others. Seeing the massive upsurge in orders, many online marketplaces are making record investments to ramp up their workforce, infrastructure, and seller base across metropolitan areas and lower tier cities to drive overall fulfilment. Nearly 2,50,000-3,00,000 permanent and seasonal jobs (direct and indirect) are expected to be generated by e-tail giants in various phases. Amazon India has already announced that it has created 110,000 seasonal jobs in the country ahead of the festive season. Flipkart has also added 75,000 new sellers on its platform over the last few months, taking the total number of sellers to 375,000.
“The majority of these new hires have joined Amazon’s existing network of associates and will support them with picking, packing, shipping, and delivering customer orders safely and efficiently. The new seasonal positions will help strengthen Amazon’s fulfilment and delivery capabilities to meet the anticipated surge in customer demand this festive season,” asserts Amazon India’s Vice President Manish Tiwary. Currently, Indian e-commerce sector is barely 3-4 per cent of the total retail consumption. But a recent NASSCOM study projects that e-commerce will create 12 million new jobs by 2030.
Non-metro Surge
While most of the market growth in the pre-pandemic period was driven by buyers from metro and Tier-1 cities, of late users from Tier-2 and Tier-3 cities are also contributing significantly to the market growth. Forrester research claims that around 75 million online buyers will participate during this festive season, of which 50 million will come from Tier-2 cities and beyond. Likewise, RedSeer in its report claims that Tier-2+ cities will continue to drive growth as they are 55-60 per cent of the total shopper base this year, similar or higher than 57 per cent in 2020 festive days. For instance, Amazon India is of the firm view that the next phase of growth is going to be driven by Tier-3 and Tier-4 cities and villages of India.
“We are seeing more and more businesses including local offline neighborhood stores, artisans and weavers transforming their traditional businesses into digital ones, the already digitised ones are thinking more deeply about using technology to scale up,” avers Tiwary of Amazon India.
“With increasing internet penetration and evolving supply chain reach to more than 95 per cent of India’s pin codes, the growth of e-tail industry will be driven by both consumer demand from Tier-2 and Tier-3 Indian cities and towns and by multiple categories of sellers ranging from micro entrepreneurs to corporates, thereby removing go-to-market barriers and aiding employment opportunities,” maintains Anand Ramanathan, Partner, Deloitte India.
Way Forward
With millions of first-time users from across the country coming online to shop due to the pandemic, India’s e-commerce sector is currently witnessing an unprecedented boom, and giving rise to hundreds of thousands of jobs across adjacent sectors. The sector is already helping SMBs market their products to a wider customer base, boost tax collection, create a technology economy, drive exports and fuel consumption; it is ushering in digitisation to help kirana shops modernise and stay resilient.
According to RedSeer, while India’s retail sector is pegged at about US$780 billion in 2020, the country’s online commerce is expected to grow fourfold to US$150 billion and likely to contribute 4 per cent of the GDP by 2022. But is it the way forward? As Ramanathan puts it, “Another evolution is that of omnichannel, where consumers during their purchase journey are switching between offline and online touch-points. As a result, we are seeing good synergies between offline retailers and e-tailers, which results in a seamless shopping experience for consumers and also promotes offline retailers to partner with e-tailers.”
