Ecommerce firms expect the festive rush to cheer cash registers

Ecommerce players are waiting for the festive season around Diwali to kick-start. Reason: Indian consumers are habituated to shopping online only when deep discounts are announced, disappointed leading online platforms in first quarter of 2015.

Will the festive rush cheer etailers?

Ecommerce firms and physical retailers are waiting for the festive season around Diwali when people loosen their purse strings. Purchases range from clothing to gift articles, home wear, gadgets to electronic goods among others. The festive rush is expected to ring the cash registers more for online players, who would announce several deals to woo customers back to shopping.

Last year was hectic for online players, who found it difficult to manage delivery of orders placed by consumers. However, this year, they are already readying themselves to handle the rush, much in advance. Lead players are expecting festive orders to be twice the amount of sales in GMV from mid-October and to fulfill them, companies are partnering a strong surface-transport network through road and rail.

As per a ASSOCHAM-Deloitte report on global and Indian ecommerce market, Indian ecommerce 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.

Ecom players struggle to drive sales

Experts feel India’s ecommerce market is at a difficult juncture with players trying to make profits on one hand and initiating measures to woo customers, on the other. Initially, to race ahead of established brick and mortar retail players, the ecommerce firms attracted shoppers luring them with domestic and international brands and designer wear at steep discounts along with facilities like cash on delivery, easy returns, wide selection and reach and so.

However, customers habituated to shopping only discounted merchandise have reduced mall and store visits and wait to shop online only when the e-tailers discount offers. VC-funded ecommerce firms are now worried with sales growth at all of India’s top online retailers slowed sharply in the first quarter of the financial year. Rocket Internet-backed online fashion retailer Jabong for instance, reported sales growth of just 35.9 percent in the first quarter compared to 187 percent rise in the first half of last year. Even top two online retailers, Flipkart-Myntra and Snapdeal witnessed a decline in their sales growth in the first quarter.

As per news reports, sales at all e-commerce sites including Myntra, Jabong and Amazon fell short of internal targets in preceding months. Will consumers habituated to shopping during discounts gradually let online players move to a full-price model as claimed by online retailers? Given the current scenario, it looks difficult.