India’s e-commerce firms are likely to sell over USD 1.7 billion [Rs 10,880 crore] worth of goods during the festive sale this year, with large firms, such as Amazon, Flipkart and Paytm Mall, line up products and offers to attract customers on their platforms.
According to a data by Redsheer, the sale is expected to grow by over 60 percent this year, as e-commerce firms are looking to woo customers from tier 2 and 3 cities, apart from big metros, alongside new consumers who have come online due to the aggressive push by telecom major Reliance Jio in increasing data access.
In the 2016 festive sales, Indian e-commerce firms saw sales of USD 1.05 billion as home-grown Flipkart used the sale period to fight back an aggressive Amazon to retain its top slot. Also Snapdeal was being edged out as a serious contender in the e-commerce marketplace model before looking at a different model, after it rejected an attempt to merge with Flipkart.
Since last year’s comeback, Flipkart has got strategic investors such as Tencent, eBay and SoftBank, the world’s biggest Internet investor, to back it, building a war chest of over USD 4 billion to take on competition this festive season and looks to double or treble sales this year.
Amazon, which has built a strong base of customers through its Prime subscription service, is also hoping to double its business. Paytm Mall, backed by Alibaba, has expanded its online play to bring offline players to the Internet and offer their products and services to customers.
“This year is likely to be the biggest sales event in the history of online retail. With a much larger online user base, higher than ever exclusive product selection and likelihood of attractive discount across categories, this will truly be a bonanza of sorts for all industry stakeholders alike — sellers, consumers and e-tailers themselves,” said Anil Kumar, CEO of RedSeer Consulting in a statement.
What’s on the platter?
E-commerce players, including Flipkart, Amazon, Paytm and ShopClues are holding festive sales on their platform currently, offering deals and discounts to customers across categories like fashion, electronics and household items.
Flipkart will offer discounts up to 90 percent on products across all categories, and is reportedly launching a marketing campaign across various platforms. The company is also said to be striking deals with online and offline partners.
Amazon has also launched its sale for Prime members from September 20, and the offer will be available to other customers the following day. The company has expanded its fulfilment footprint to 41 centres in 13 states to help storage and quicker distribution.
Both are banking on equated monthly installment schemes and other easy financing options, including a buy-now-pay-later plan, to boost sales volumes.
Paytm Mall, which is in its first festive season, started its sale event on September 20 by offering high cashback to customers and is eyeing 15% sales from this event. “We are well on our way to achieve half a billion dollar of sales this festive season. We are giving a number of offers and discounts to consumers during the festive season,” Paytm Mall Chief Operating Officer Amit Sinha said in a statement. Sinha said Paytm Mall has registered a “massive surge” in transactions on its platform on the first day of its sale with customers from 750 cities and towns placing orders on its platform.
Other players are also offering 4-5-day sale events, that starts on September 20, will go on for 9-10 days.
Etailers to see more cash burn
E-commerce companies could see a cash burn of up to USD 400 million during this year’s festive sales, compared to about USD 200-250 million last year, research firm RedSeer Consulting. The cash burn for the e-tailing industry, which has deep-pocketed investors like SoftBank and Alibaba backing players, is forecast to reach up to USD 370-400 million this year on a expected gross merchandise value (GMV) of USD 1.5- 1.7 billion.
Last year, the cash burn stood at about USD 200-250 million on a gross GMV or total sales value of merchandise sold of USD 1.05 billion, it added. The report said that it is expected that there would be an increase in discounting spends and supply chain expenses as a percentage of GMV when compared to last year.
Nonetheless, India’s e-commerce market is expected to reach USD 50-55 billion by 2021 from the current USD 6-8 billion, according to a recent report by Retailers Association of India and Boston Consulting Group. The e-commerce penetration would be maximum in sectors such as consumer electronics, apparel, homeware and furniture, luxury, health, FMCG and food and grocery.
This phenomal growth is attributed to rising middle class shoppers, coupled with faster Internet service and greater mobile uptake. The ecommerce scenario is heating up the competitive landscape where large local players are increasingly vying for market share by improving their logistics and mobile platforms, and in some cases, even moving entirely to an app-only service. Experts believe, the trend is expected to contiue in the next 4-5 years.
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