It’s that time of the year again when marketplaces and shopping malls attract large volumes of customers. This marks the onset of India’s frantic festival season when Indians are ready to venture on their annual shopping spree. While offline shopping has its own charm for many consumers, the increasing penetration of social media, the explosion of eCommerce, and the easy availability of credit have given rise to new consumer segments and transformed purchasing habits.
The concept of eCommerce and the ease of access to top brands and diverse product offerings has made festive shopping a breeze for Indian consumers. It has also inculcated a dramatic change in the consumers’ shopping experience and attitude. However, the most significant impact eCommerce has had on consumer shopping habits is that they can shop from anywhere, anytime, without the concern for keeping to the store hours to make a purchase.
While the ability to research and shop online has been around for a while, mobile apps have driven eCommerce to the next level because shoppers can use their device at any point and receive quick one-day delivery. That said, consumers have reshaped their way of shopping from essentials to aspirational purchases.
This rapidly expanding spending landscape from local brick & mortar stores and malls to shopping through mobile phones is offering an excellent opportunity for marketers to create a seamless experience between online and offline shopping. Brands are making the transition by creating apps and optimising their online stores to ensure that consumers have the choice of where, when, and how to shop. A shopper can purchase one’s choice of product online, receive it in a day or two, and even return it to a physical store if unsatisfied with it.
The COVID-19 pandemic had slowed the global economy in the first half of this year, bringing aspirational purchases to a halt for some time. However, according to the Adobe Digital Economy Index report, eCommerce sales during May 2020 alone have eclipsed the entire 2019 festive season. Due to the enforcement of prolonged lockdowns since March, eCommerce spending has grown beyond expectations with more than $52 billion in transactions. The Indian e-retail market is now relying on the festive shopping season to increase its annual revenue.
Festival shopping is a significant affair for millions of Indian shoppers. Be it a dip in the economy caused due to the unprecedented outbreak of COVID-19, or a high inflation rate that stresses home budgets - Indian consumers are unstoppable when it comes to splurging during the festive fervor of Navratri and Diwali.
Effect of changing payment mechanisms on consumer spending behavior
Digital payments have received a much-needed boost lately due to the rise in demand for essential grocery shopping, food ordering, bill payments, medical payments, utility payments, and mobile top-ups. Consumers have preferred to order from home during the pandemic. In fact, these unprecedented times have hastened the pace of getting used to online payments, even in small cities.
There has also been massive demand from the small grocery traders for digital payment solutions as they are quick, easy, and hassle-free. According to a recent report, the number of digital payment transactions has surged by 23% between June and July. This growth can be attributed to the rapid adoption of digital payment methods such as e-wallets, UPI, debit cards, credit cards, and the revolutionary microcredit.
Further, the COVID-19-induced lockdown has helped the concept of microcredit gain popularity in India. With a majority of customers opting for online shopping due to safety measures, the 'Buying now, paying later' model, is getting further headway. This is because it offers the ease of making one-stop purchases and payments seamlessly without requiring the consumers to disclose their bank details or visit ATMs for cash.
Microfinance is changing the purchasing behavior amid COVID-induced uncertainties
The microcredit concept can be used to order essentials, groceries, food, and medicines online where consumers can buy things now and pay the collated amount later. Additionally, it also provides them with a small line of credit, which acts as interest-free money for buyers and allows them more time to arrange money. In the wake of the online festive shopping season, such a concept of microfinancing can be a gamechanger for the economy. It is worth noting that quite a few fintech companies have rolled out features like interest-free unsecured cash advances.
These players are leveraging modern technologies to digitalise the traditional ‘Khaata’ or ledger system that was once practiced in the country on the basis of trust. A majority of consumers today are still reeling from the effects of the pandemic, and their purchases for essentials have preceded aspirational items. As we are slowly progressing towards the new normal, the dawn of digital payment facilities like microcredit and pay later platforms could instill hope of robust sales during the festive season and beyond.