By Ananya Jain
“Get up kids, the house needs to be cleaned!”, a sentence every Indian kid has heard when Diwali is approaching. Diwali brings new light into people’s lives and a ray of hope expressed through shopping. So, it’s not without reason that Indian retailing industry has its hopes high even in Covid times and expects the festive season to make up for the limp sales throughout 2020. An added benefit to the e-commerce retail industry is people’s preference to stay indoors due to rising cases of coronavirus.
E-commerce gross merchandising volume is believed to touch $7 billion this year during the festive season, a big jump from $3.8 billion last year. With Amazon’s Great Indian shopping festival and Flipkart’s Big Billion Days sale coming up, the market expects these festive sale events to garner $4 billion in sales.
A rise in e-commerce sales was noticeable when the non-essential category opened up during the unlock phases. Earlier, in its earnings report, Walmart has said that since the reopening of lockdown, Gross Merchandising Volume at Flipkart has exceeded pre-COVID-19 levels.
Here are some reasons why online sales experienced such a boost even in unprecedented times:
- COVID driven shift to online diwali shopping
- Rise of new techniques of shopping leading to diverse customer demographic
- Stronger nationalist sentiment
- A thumping hit to organised retail
- Rise of Jio
While malls across the country are also hoping for a festive revival, the second wave of coronavirus cases in major cities like Delhi could act as a barrier. Almost every other e-commerce player from Amazon, Flipkart to Snapdeal, has been betting on Tier II and III markets – as the next growth boost is expected to come from these ‘overcrowded’ cities.
However, small cities are a major market to smaller sellers and account for a major chunk of sales. With smaller retailers upping their e-commerce game, a gigantic rise in sales is expected. With over 160 million online shoppers, total e-commerce sales for 2020 is expected to hit $38 billion.
The sale, which began on October 16, and was on for five days, attracted 20 million visitors to its online marketplace in just the first 19 hours of Flipkart’s ‘The Big Billion Days’ sale.
Flipkart ran its mega sale at the same time as ‘The Great Indian Festive Sale’ of its rival Amazon India and Snapdeal’s ‘Diwali Sale’.
Having experienced a massive customer engagement since the opening at midnight, Flipkart came up as a promising online shopping service in the long run.
Flipkart claimed to have sold a million products in the first 10 hours of the sale. The company also credited itself for making these sale events an industry event for the e-commerce players. “Big Billion Days has become the de facto online shopping event for India. We are happy to note that other e-commerce players have followed Flipkart in making Big Billion Days an industry event,” the spokesperson of India’s largest e-tailer said.
Amazon India claimed that October 17, the first day of the ‘Great Indian Festive Sale’ was the biggest day yet in the history of the company, without disclosing total figures.
Snapdeal, which conducted a sale of electronic goods on October 16 also announced that the sale had exceeded its expectation with an overwhelming response from customers across the country. The company recorded an increase of 17 times in revenue and was set to cross $100 million (about Rs 651 crore) in sales by the end of the day, it said.
A similar strategy was used by reliance when they started Reliance fresh in 2006 by offering the vegetables at almost 40-50% discount of market rate to gain market share. And people flocked to it, just like they are to Flipkart right now. But even after gaining a huge customer base, when they brought their prices to market level, customers immediately went back to their traditional grocers.
Eventually what it has done is instead of creating a brand loyalty, Flipkart has simply created a loss making competition in the e-commerce space in India. The day Flipkart stops giving such huge discounts and think of making profit, people will again start buying from offline stores or resort to other upcoming e-commerce services for the same. Although, one good thing they are doing is that they are introducing relatively unique products into the Indian market eg. the new dual screen phones, Xiomi phones etc., which can help them to secure some profits as people do not expect discounts in new products which are unknown to them.
Ultimately, the success of such festive event sales depend upon the profitability and not just sales revenue. Even though revenues generated by them are humungous, they barely make profits as their margins are next to zero.