Holiday season to end in style; consumers return to e-commerce businesses to spend


The holiday season in India has finally seen consumers loosen their purse strings after a rather difficult year and a half due to the ongoing pandemic. E-commerce players recorded a gross merchandise value of $ 9.2 billion this year, a 23% increase from 2020, according to data released by research firm RedSeer. A number of new players have joined in the Diwali Festive Sale and existing players have stepped up their efforts to get the most out of it. “Historically, when we look at holiday sales, we mostly end up looking at Flipkart, Amazon as the sales engine. What we have seen this time is that the sale is much wider than usual. We have seen players like Meesho, Reliance, Tata Cliq take a bigger share in sales. As the festive sale is a flagship event, many brands have also participated more aggressively with discounts and promotions, ”Ankur Pahwa, partner and national leader in e-commerce and consumer Internet, told BrandWagon Online. .

While Tier 2 and 3 cities accounted for the bulk of sales this year, the sale was much larger than in the past 18 months, people have become accustomed to e-commerce channels as a source of purchase. . After its month-long Great Indian Festival, Amazon claimed in a blog post that 79% of new customers are from Tier 2 and 3 cities such as Ernakulam, Guntur, Patna, Krishna, Bhopal. Additionally, one in two Prime members who shopped during the holiday season were from Tier 2 and Tier 3 cities, Amazon added.

During the festive sales of 2021, there was also a change in the demand for product categories. Among all categories, mobile accounted for 41% of the overall GMV recorded by e-commerce players this holiday season, according to the RedSeer report. Significantly, the fashion category gained momentum after a year of slow growth and accounted for 23% of the overall GMV. “It’s a very positive trend that fashion and clothing have picked up. A large number of consumers refrained from such purchases last year. The clothing that is coming back strongly is in itself an indicator that the digital economy is heading in the right direction, ”said Sreedhar Prasad, Internet business expert.

In fact, the year Cash on Delivery (CoD) has declined significantly, especially due to the increase in digital payments like Unified Payment Interfaces (UPIs). According to Prasad, this trend could benefit e-commerce players by reducing the number of last-minute cancellations. However, Pahwa was quick to point out that early buyers still rely on CoD as new PINs hit the ecommerce scene. “Many existing consumers have switched to prepaid payment by cards, UPI and BNPL. The COD mix may not have diminished significantly, but new buyers will also eventually switch to prepaid once they build trust, ”Pahwa added.

Along with the increase in the number of buyers and gross sales, e-commerce platforms have also reported growth in the number of sellers. The Shiprocket e-commerce shipping and activation platform claims a 213% increase in the percentage of new sellers who have joined the sale in Tier 3 cities. As Saahil Goel, CEO and co-founder of Shiprocket, nearly 47,000 new Tier 3 city vendors have joined the platform, up from around 16,000 vendors in 2020. Tier 1 and 2 cities saw increases of 138% and 175% respectively , added Goel.

“The holiday season has generated strong growth opportunities for vendors and MSMEs and has provided better incomes and livelihoods for Flipkart’s supply chain partners, including Kiranas lakhs. In fact, Flipkart has seen a growth of over 55% in the number of new sellers this holiday season, compared to 2020. Levels 2 and 3 saw the highest number of seller registrations with 57% of sellers from small towns such as Jaipur, Surat. , Howrah, Tirupur and Panipat, among others, ”said a spokesperson for Flipkart.

Enablers such as better logistics, robust distribution, financial products including buy now, pay later (BNPL) also helped drive growth, according to EY India’s Pahwa. Cloud-based supply chain company Prozo has increased its warehousing capacity three times this year as demand for warehousing and fulfillment solutions has increased dramatically, said Ashvini Jakhar, Founder and CEO of Prozo. The company has seen its demand quadruple this year, added Jakhar.

After a satisfying Diwali season, many e-commerce players are now holding Black Friday sales, winter sales and also getting ready for Christmas sales. “The sales dynamics of Diwali will not stay the same in December, but the growth from October to November will also have a ripple effect on year-end sales. However, we will have to keep in mind that the new variant is also now a source of concern in the country and this could affect buyer sentiment, ”said an industry expert.

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