E-com doing unprecedented business in festive month

As of June 2015 India has an internet user base of about 354 million this figure is expected to cross 500 million this year. Despite being the second-largest user base in world, ecom penetration in the country is low compared to the US or Europe. However, the figure is growing at an unprecedented rate adding around 6 million new entrants every month. The lucrative segment has attracted many players from global players like Amazon to homegrown Flipkart, Snapdeal and the like. Most of them are going all out to attract the quintessential Indian shopper with festive discounts.

Ecom cashing in on festive sales

Driven by festive offers and discounts on their platforms, e-commerce companies are expected to register transactions worth Rs 11,000-13,000 crores in October, a report of RedSeer Consulting stated. According to the report, e-tailers are likely to surpass all sales expectations in the ongoing festive sale days and for the month of October 2016 as a whole as a result of the bumper sales performance of e-tailers. The gross GMV for e-tailing industry is likely to be Rs 6,500-7,700 crores for big fesetive sales week. Almost 35-40 million units are expected to be sold in this six-day period.

In fact E-commerce marketplace Flipkart says it has had a better brand recall among customers this festive season than rivals. Sales on its platform spiked during rival Amazon’s sale during October 17-20, despite it not running any such campaign or offering extra discount. Higher sales were reported in key categories such as smartphones, electronics, fashion and large appliances. The unexpected jump is making Flipkart course-correct its estimates for the month. With the company’s second sale planned on October 25-28, it expects another large turnout that could help boost sales to nearly four times its monthly sales average. As Smrithi Ravichandran, Director of category design and management at Flipkart they saw after Big Billion Days (BBD) was a 30 per cent increase in baseline, but on October 17 they saw a spike in revenue and traffic. Ravichandran believes Flipkart’s ads promoting the BBD struck a note with customers, breaking away from rivals Amazon and Snapdeal’s strategy of trying to create an emotional appeal.

Meanwhile Amazon, too stakes claim in being the leader. Armed with sufficient funds, it wants to now outprice competition. It sold 15 million items (including an estimated two million Prime memberships) during its recent sale. A duel of words between Flipkart and Amazon ensued soon after the first round of festive sales, with Amazon saying it’s the leader. Now with a jump in sales at Amazon’s marketing expense, Flipkart is trying to add fuel to the fire.

Brick & Mortar too cashing in on festive demand

Meanwhile brick and mortar stores are also attracting enough footfalls and they are relying on promotions and festive demand to perk up business. Offline retailers are of the view that they will not counter the move of ecom companies with big sales and discounts and stick to selective promotions instead. They are pushing the latest merchandise at full price during the festive season because people in any case would want to consume.

Several brands are offering promotions, without branding it as end-of-season-sale. For example, Steve Madden ran an offer of a 40 per cent discount on the purchase of two pairs of shoes. To be certain, a similar offer is given during the brand’s end-of-season-sale that is held twice a year. H&M is giving a free shopping voucher of Rs 2,500 on purchases of over Rs 7,000. Bata, Shoppers Stop and Marks and Spencer and a few more have adopted similar strategies.

Although apprehensive on pegging an exact figure, a number of mall owners as well as retailers are looking at a double digit growth between October and December, the main festive months. This is when, market analysts feel that the growth rate would likely be between 10 per cent and 15 per cent on an average.