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Ecommerce firms expect festive bonanza to cheer cash registers

By Sujata Sachdeva

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Retail

Festive season is already on us. Keeping an eye on consumers, who indulge in big ticket spending during the period, online ventures are leaving no stone unturned to reap benefits, this year. While lead players failed to manage the rush around last year’s festive season, this year, they are ready to take on the challenge. They are doing it backed by billion-dollar venture funding, technological strength, established logistics and supply chain network coupled with massive investments in marketing efforts.

Ecom firms set to handle the mad rush

Flipkart’s failure to manage unexpected crowd around its ‘Big Billion Day’ sale, last October became an eye-opener segment. Flipkart opened doors to their much touted ‘Big Billion Day’ on October 6, 2014 at 8 AM, calling it as ‘the sale to end all sales’ but did not succeed in managing the crowd. But now almost all big and small ecommerce companies flushed with funds, are strengthening their front- and back-end infrastructure capabilities to handle large number of orders.

Flipkart, Snapdeal and Amazon along with other players are ready to shell out Rs 2,000 crores in the next four months to woo customers. They are also roping in celebs such as Shah Rukh Khan and Aamir Khan. These companies spent around Rs 1,300 crores on marketing and promotion during September-December period, last year. Last year, top players were the big spenders during Diwali, but this year even start-ups are readying themselves to cash in on the opportunity.

Apart from heavy investments in print, social media and TV, allied product supplies industry is also witnessing a significant rise in orders for products such as large corrugated boxes. Manufacturers of such supplies for both Flipkart and Amazon are seeing orders double compared to last year. Media reports suggest one of India's largest ecommerce companies has doubled the commissions for coupon companies and cash-back sites from 8 percent in August to 16 percent.

Lead players are expecting festive orders this year to be twice the amount of sales in GMV from mid-October. They are partnering strong surface-transport network through road and rail. For instance, Ecom Express, which delivered almost 80,000 orders per day, last year, is looking forward to at least three to four lakh a day. Even Flipkart, which reported Rs 600 crores in sales in 10 hours last Diwali has invested in third-party logistics players for linehaul services.

Flipkart ships more than 80 percent of its overall volumes by Ekart and 50 percent of the national load using surface transport. However, during the festive season, 70 to 75 percent of its orders are sent through Ekart. Amazon India is also investing in extending the network covered by its logistics arm, Amazon Transportation Services (ATS) to expedite the shipping process.

Spending to boost profits

Consumers are expected to spend around 6 billion dollars (Rs 39,000 crores), thrice as much as last year, on buying clothes and gifts online. Estimates suggest, nearly 40 percent spend on clothes and goods takes place between September and December. Rise in online spend is also expected to drive sales growth at ecommerce firms waiting to turn profitable.

As per a ASSOCHAM-Deloitte report on global and Indian e-commerce market, Indian e-commerce market was pegged 13.6 billion dollars (over Rs 86,300 crores) last year, and by the time 2015 ends, it will cross 16 billion dollars (over one lakh crore) mark. However, the actual picture, according to industry insiders is different, with leading firms eyeing further funding for growth amid low consumer buying.

Experts feel India’s e-commerce market is poised to leap forward with players raking in profits and wooing customers at the same time. Since festivals are the time when consumers shop the most, online players are waiting to make the most of this opportunity.

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Flipkart