News

online festive sales: Flipkart and Amazon corner 88% share of festive online sales: Report


Online marketplaces Flipkart Group and Amazon recorded combined sales of nearly $7.3 billion–nearly a fifth more than initially estimated–during the month-long festive season, according to market tracker RedSeer Consulting.

The online surge was boosted by an influx of new shoppers from India’s smaller cities and towns as well as pandemic-induced sluggishness in offline retail, the report released on Thursday said.

The two ecommerce giants together cornered an 88% share of the overall online industry sales of $8.3 billion from mid-October to the middle of November, according to the consulting firm. Of this, the share of Walmart-backed Flipkart Group, including fashion portal Myntra, stood at 58% compared to rival Amazon’s 30% share in the festival sales, the report said, with the balance coming from other smaller ecomm platforms.

“The success story this year has been Tier 2 customers, and Flipkart has historically been strong and very focused there, while Amazon has always been more focused on the metros,” said Mrigank Gutgutia, a director at RedSeer.

A representative for Amazon said, “we cannot comment on speculative reports without transparent methodology,” in an emailed response to ET’s queries on RedSeer’s estimates on the market shares of the two online majors. Flipkart declined comment.

Even as physical retail stores suffer from a sharp decline in footfalls due to pandemic-induced lockdowns, India’s online retailers are attracting a swathe of first-time buyers from mofussil areas.

Online marketplace Snapdeal said that four out of every 10 orders placed during the festive sale was from first time users, while more than 90% of orders originated in non-metro cities.

READ  Under-20s are half as susceptible to Covid-19, study suggests

“What has also been different this (season) is the steady flow of orders to sellers in smaller centres like Avinashi in Tamil Nadu for textiles, Palitana in Gujarat for footwear, Rewa in Madhya Pradesh for gaming accessories, Muktsar in Punjab for herbal products,” said a Snapdeal spokesperson.

Flap3

Apart from the boost to online retail provided by the Covid-19 related shifts to e-purchases what has also helped ecommerce companies overcome a challenging macro-economic environment are the partnerships with banks for EMI plans as well as exclusive product launches on their platforms.

For brands, the online surge has proven equally beneficial as they gain access to a new customer base across smaller towns.

40 million new users shopped online this year on the back of affordability schemes and an increasing share of users from Tier 2 cities and beyond, according to RedSeer data.

“We grew more than two-fold this festive season…a big reason for this is the increased e-commerce penetration,” said Bharat Kalia, cofounder of home appliance brand Lifelong Online. The company now has a portfolio in health and fitness as well.

RedSeer data shows that even though the gross merchandise value per customer dropped 10% to Rs 6,600 compared to the same period last year, the loss was offset by the sharp increase in the overall number of shoppers.

“This year, while a massive number of new customers shopped online, these shoppers are looking for affordable and value conscious purchases driving the per person value down,” said Gutgutia.

GMV is overall sales clocked by an online marketplace and does not include discounts, returns, cancellations and cashbacks on products sold. It is also different from the revenue generated by marketplaces, as they charge only a percentage of the overall sale value of products as commissions, apart from earning from advertising and providing sellers with logistics services.

READ  WTO ban on tariffs for digital trade extended until June 2020

According to Anand Ramanathan, Partner, Deloitte India, this season the shipment return rate has also seen a dip across categories. “The reduced returns can be attributed to the new safety norms and increased demand for essential products.” he said.

However, online sellers are sceptical about the continued patronage for online shopping by customers in the next quarter when discounts and bank offers may not be still on offer.

“ The anticipated drop in sales ( could be ) significant, at least 40% or more in the discretionary categories,” said an executive from an electronic brand.

“That said, it is still much better than offline,” he added.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.