Covid-19 impact: E-commerce companies may see 50% rise in festive sales

Flipkart, Amazon projected to cross $7 billion in these sales during Covid-19

The upcoming festive sales are expected to push up the annual gross merchandise value (GMV) of e-commerce companies to around $38 billion, a growth of 40 per cent from the previous year. With Covid restrictions playing a spoil sport for physical retail, e-commerce festive sales could cross the $7-billion mark, according to a report by research firm RedSeer Consulting. This is estimated to be 50 per cent more than what e-commerce players had garnered last year from these sales.       

Top e-commerce firms would host flagship sale events such as Flipkart’s ‘Big Billion Days’ and Amazon’s ‘Great Indian Festival’ between October and November.

Driven by the massive shopper growth, RedSeer expects the sales for the first event itself to grow 50 per cent year-on-year over last year to reach $4 billion. It said Covid-19 had resulted in a significant rise in the number of new online shoppers as consumers now, more than ever before, prefer to shop in a manner that is convenient, safe and hygienic. With about a month to go for the sales, consumers are already showing positive sentiments.

“Because of Covid, consumers have become more digitally savvy. Those consumers that you would never expect to buy specific products online have gained the confidence to do it. That increases the potential number of customers that would transact on (e-commerce) platforms,” said Mrigank Gutgutia, director for e-commerce at RedSeer, in an interview. “Because of Covid, offline shopping has been curtailed a lot. People from tier 2 and tier-3 cities and towns have become comfortable with online shopping due to Covid.”

Offline recovery is still weak as consumers are apprehensive about visiting high human touchpoint areas like malls and retail outlets. This year, the Bharat and democratization theme, along with Covid, would see a much higher number of shoppers buy online during festive sales. Majority of these users are coming from Tier-2 and Tier-3 cities and towns.

There is also a rise in new shopping models owing to changing customer demographics. This includes video-based and WhatsApp based shopping, a new addition to the festive landscape.

“E-commerce firms are investing a lot on warehousing and supply chain as they want to really ensure that so many new customers who are shopping for the first time should have a very good experience,” said Gutgutia.

Among others, Flipkart has said it will help generate over 70,000 direct and millions of indirect seasonal jobs as it gears up for the upcoming festive season and its Big Billion Days (BBD). The onboarding of more than 50,000 kirana stores by the company for last-mile delivery will also create thousands of seasonal jobs.

To gear up for the online sale season, Amazon India had earlier announced the addition of 10 new fulfilment centres (FC) and expansion of seven existing buildings. On Thursday, it announced the launch of its first fulfilment centre (FC), in Bihar. It is specialized for large appliances and furniture and will be instrumental in enabling sellers in the state to reach out to customers across the country, further boosting their market presence.

The strong nationalist sentiment, coupled with the government’s Atmanirbhar policy, is expected to impact the brand mix in categories like electronics and mobile.

The RedSeer report said organised retail had been massively hit. While there would be some recovery, it is not expected to fully recover by the festive period and some of the share will go to online platforms. The report said that the fashion category will do well due to its relatively slow recovery rates post lockdown. This is coupled with activities and social gatherings increasing and aggressive discounts from platforms.

Long-tail categories including home and home furnishings are expected to do better than anytime before due to high demand for upgrading work- from-home and study-from-home environment.

The report said mobiles and appliances categories would remain strong but not as large as previous years. The demand for these verticals has been somewhat satiated with category-specific sales post lockdown.

Analysts said consumers were more focused on affordability and discounts as many of them had lost jobs.“Platforms would be looking at bringing down the prices of products and innovative EMI (schemes),” said Gutgutia.