Despite Concerns Of Third Wave, E-tailers Likely To Clock Decent Growth This Festive Season

An analysis on how the current scenarios will impact the revenue for etailers
Despite Concerns Of Third Wave, E-tailers Likely To Clock Decent Growth This Festive Season

With the signs of pandemics wading away, the e-commerce festive sales have begun early this season. The consumer sentiments seem to be high as compared to last year and as per the recent research reports, e-commerce players are expected to experience an upsurge in demand.

As per a recent report by RedSeer, India’s e-commerce festive season sales are expected to top $ 9 billion – nearly a quarter of growth over the previous year.  

Experts believe that the accelerated online adoption, deeper internet penetration, and the need to recover losses suffered during the pandemic could be the main reasons for the growth in this year’s e-commerce festive sale. 

As the festive sales of the top e-commerce players have already started from October 3, considerable positive signs of growth are already visible. Flipkart Plus program (early access) saw a 40 percent growth this year as compared to last year. Snapdeal reported strong demand from the Tier-II and Tier-III cities on its ongoing festive sale event. 

“The continuing rise of Bharat is a strong and visible trend even in the initial days of the sale season. Nearly 43 percent of Snapdeal’s orders are flowing from Tier III cities like Dhanbad, Karimnagar, Gorakhpur, Chittor, Kurnool, Srinagar, Guntur, and Alwar. The order volumes from Tier 1 cities like Pune, Lucknow, Ahmedabad, Jaipur, and Trivandrum are also growing as the sale progresses,” states Snapdeal spokesperson. 

Competition Galore

Last year, with a strong push in the e-commerce space from Reliance’s Jiomart and Tata Cliq, owned by Tata UniStore Limited of Tata Group, against the e-commerce giants Amazon and Flipkart, the sector has become massively competitive. Over the year, e-tailers have been venturing into newer categories to meet all the customer’s needs from one place. 

“This year is likely to see much more intense competition and spends from all online players, as it is coming after a very challenging 1st Quarter in the financial year ’21-22, with sales (both online and offline) in April to Jun period being very slow due to the 2nd wave,” says Rajat Wahi, Partner, Deloitte India.

Sales Recovery

To dig deeper into how the sector has been performing, the e-commerce sales in the last year 2020 stood at Rs 290 billion against Rs 190 billion in 2019 and Rs 150 billion in 2018, as per stats shared by Statista.com.

So, there has been a 52.63 percent growth in sales last year as compared to 26.6 percent growth the year before. This surfaces the enormous market capture that the e-commerce sector was able to do during the pandemic period. However, given the pandemic-stricken last year was mostly uncertain operationally for the sector, it can be considered an experimental one for the e-tailers. Based on the lessons learned last year, the firms are willing to up the ante for the current year.
 
Secondly, in a recent report by the Retail Association of India (RAI), retail businesses in the North and the South of India have indicated sales nearing recovery in August 2021 with sales at 98 percent and 97 percent, respectively, of the pre-pandemic levels (August 2019), as against 78 percent (North India) and 82 percent (South India) sales in July 2021.

Clearly, this suggests that retail spendings had started rising even before the festive season; and if the third wave did not create much of an impediment, things are likely to become a lot better.
 
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), reiterated the positive expectation from the festive season in a statement: “As the festive season approaches and the inoculation drive picks up pace across the country, we are hopeful that the festive shopping this year will drive positive growth for most retailers, with the possibility of some retailers doing even better sales than the pre-pandemic levels. Though recovery at the moment looks encouraging across categories, retailers continue to maintain cautious optimism due to the possibility of a third wave of the pandemic.”

Impact Of Restrictions 

However, irrespective of the damage that the impending third wave may or may not bring, due to the cautiousness of the same, the state governments are bringing stronger restrictions in offline retail outlets across malls and high streets. For instance, in Maharashtra only vaccinated customers are allowed to enter the malls and the rate of vaccination is also low. This may turn out to be a deterrence to the number of footfalls in these places, and as such, the proportion of people taking online routes to make the most of the festive period will likely increase.

Currently, Flipkart’s annual sale event is going on which kicked off on October 3, 2021, and will till October 10, 2021. Snapdeal’s ‘Toofani’ sale is also on the run from October 3 to 10. Amazon’s Great Indian Film Festival, on the other hand, which started on the same date, is going to last for a month. Tata CLiQ Luxury, the Tata Cliq’s vertical for luxury brands, is hosting its annual sale from October 6 to October 15. Similar sale events are being conducted by other e-commerce players like Myntra, Snapdeal, Meesho, etc.
 
Ahead of the festive season, Snapdeal had opened 130 new logistics hubs to serve the growing demand for online shopping from smaller cities in states like J&K, Uttar Pradesh, Telangana, Rajasthan, Odisha, Karnataka, Maharashtra, and the north-east region.

Flipkart has partnered with over 120 brands and co-created special-edition products with celebrities to have a wide offering this year.

In a survey co-conducted by Amazon India and Nielsen, more than 78 percent of the surveyed Amazon sellers expect to reach out to new customers, 71 percent mentioned an increase in their sales, and 71 percent mentioned a recovery in their business as their top expectations from the festive season.

In the final analysis at the end of this festive period, we will learn how things finally play out.

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