As the ecommerce ecosystem in the country takes giant leaps in strengthening itself as the chariot driving the seasonal sales during festivals, this year isn't expected to be any different. The festive season sales on these platforms have already made a mark and these platforms have outperformed other channels through which customers do their festive shopping.
A report by Unicommerce has revealed that ecommerce order volumes grew by 20 per cent during the first four days of the festive season sale in 2024 (26 to 29 September 2024) when compared to the first four days of the festive season sales last year (7 to 10 October 2023). In the same period, the gross merchandise value (GMV) also increased by 24 per cent over last year.
While it is clear that the customers have been preferring these online platforms over other channels, it is important to understand what has been driving this growth chariot which is keeping the sales engine running.
The All-round Bonanza
One aspect of the ongoing festive season sales that stands out is the fact that the surge in sales is not limited to just one or two categories. In fact, the platforms have been registering growth on all fronts. The surge in sales across a diverse range of categories has propelled the festive season sales events on an upward trajectory.
“This festive season, customers are blending tradition and modernity, with gold and diamond jewellery, including lab-grown diamonds, seeing a five times (5X) spike in demand. Smartwatches surged 10X, and premium watches grew 6X, reflecting strong interest in premium lifestyle products. Men’s sneakers saw over 7X growth. In Beauty, luxury categories grew 4X,” said Zeba Khan, Director, Fashion and Beauty, Amazon India.
The Growth In Consumer Electronics Sales
Whenever the ecommerce platforms come up with their annual sales during any occasion, consumer electronics remain at the core of the sales mania. Mobile phones, headphones, cameras, home appliances and many more such items have always kept the consumers excited and this year, it’s no different. The ecommerce platforms have witnessed growth in this segment during the ongoing sales.
“The consumer electronics category, in particular, has seen significant growth in the adoption of premium products, as customers upgrade to flagship Android devices, large-screen televisions, side-by-side refrigerators, high-capacity washing machines and more. The key value propositions driving this shift are selection, value, and convenience which continue to attract the customers to the marketplace,” stated Ranjit Babu, Director, Consumer Electronics, Amazon India.
Silver Lining For Diamond Industry?
While the Indian diamond industry is going through a tough phase and has been grappling with several issues, there might exist a silver lining. Lab-grown diamonds have been creating a buzz, especially during sales events.
“The rise in sales can be attributed to growing awareness and education about lab-grown diamonds. Younger customers, in particular, appreciate the practicality of lab-grown options, as they offer the same aesthetic appeal as natural diamonds but at a better value,” commented Disha Shah, Founder and Designer, DiAi Designs.
What’s Causing The Sales Surge?
The surge in sales during annual sales events is not a unique phenomenon, as sales usually peak every year. However, there are a few factors that drive customer demand and trends during a particular time period. Aspects such as convenience, speed, discounts, and financial stability have played a role in keeping the sales engine running.
“Increasing customer affinity for convenience and speed. Customers have been spoilt by quick commerce platforms, and now expect comparable delivery experiences through brands and ecommerce marketplaces,” remarked Madhav Kasturia, Founder and Chief Executive Officer (CEO) of Zippee, a rapid delivery startup for ecommerce brands.
While deep discounts have been under a lot of criticism, especially from the offline retail bodies, there is no denying the fact that they have been instrumental in making sure that the ecommerce platforms have an upper edge during the festive season sales.
“Platforms that offer discounts, promotions, and trials have seen significant traction because they reduce the financial risk associated with trying new products,” said Swagat Sarangi, Co-founder, Smytten and Smytten Pulse.
What’s New This Year?
Certain factors drive demand and lead to an uptick in sales at a certain time and with this year’s festive season’s sales surge, credit facility and the rising influence of the non-metro cities and higher disposable incomes due to the softening of inflation which led to improved rural consumption have been the talking points.
“Higher disposable income amongst the Indian youth, compared to previous years and multiple affordability options such as no cost equated monthly instalments (EMI) on credit cards and easy access to personal loans have been a major driving factor for sales, especially on platforms like POP which is focused on selection that appeals to young India,” commented Bhargav Errangi, Founder, POP, a fintech firm.
Rising Influence Of Tier-2,3 Cities
As the majority of reports had predicted the rise of non-metro cities during the festive season sales, they have lived up to the expectation. With the enhanced internet penetration and improved logistics distribution of part of the ecommerce platforms, the tier-2 and 3 cities have been matching the metro cities when it comes to being the captains of the cruising sales ship.
“Noticeable rise in adoption from Tier-2 and Tier-3 cities, with consumers becoming more comfortable with Ecommerce. Faster internet penetration and improved logistics distribution are making it more conducive for brands to cater to these regions effectively,” added Kasturia.
The improved delivery networks and better logistics management have added to the efforts of ecommerce platforms in retaining and strengthening their spot on the pinnacle of the sales leaderboard during the ongoing season.
“With metro markets nearing saturation, platforms are increasingly targeting smaller towns for expansion. Quick commerce platforms are tapping into these regions by offering hyperlocal delivery networks, making it easier for consumers to access essentials and groceries without the long wait times traditionally associated with e-commerce,” highlighted Sarangi.
The Road Ahead Unclear
Even though the rise of the ecommerce ecosystem during the ongoing festive season is a testament to the fact that the newer version of shopping medium for consumers has taken a giant leap in a forward direction, there are still several roadblocks that have proved to be a hindrance in their smooth expressway ride.
“A new challenge in 2024 is the logistical complexity of servicing Tier-2 and Tier-3 cities as demand grows. While quick commerce platforms promise fast delivery, ensuring that logistical networks can meet this demand in smaller towns (with less developed infrastructure) has become an operational challenge,” added Sarangi.
Since the country possesses a diverse cultural demography, certain barriers in terms of language and personalised catering to the needs of customers have emerged as a potential challenge for these platforms.
“Additionally, language barriers and cultural differences necessitate greater investment in local language support and personalized customer service. Companies that can address these challenges effectively will continue to dominate in the Tier-2 and Tier-3 markets," stated Sarangi.
Understanding consumer behaviour and catering to the needs and requirements of every unique user, customer goes through various channels. Technological expertise and targeted marketing strategies become essential in this regard.
“A large number of potential customers browse websites without completing purchases, creating a significant gap in understanding consumer behaviour. Even when businesses can identify this anonymous traffic, they often lack the expertise to effectively utilise the data for targeted marketing strategies,” highlighted Umair Mohammad, Co-founder and CEO of Nitro Commerce.
The ongoing festive season sale events have been successful in not only attracting customers but also in making sure they are able to convert the increased interests and desires into a final call to action (sales). This season is proving to be a game changer for the market which once was reluctant to purchase something over the internet. The same market is now becoming a crucial stakeholder in its growth story.
