In a significant shift in consumer behaviour, ecommerce purchases of televisions, air-conditioners and microwave ovens helped the industry tide over the decline in sales at brick-and-mortar stores last year with online accounting for 9-30% of their overall category sales, latest data from sales tracker GfK showed.
This comes as a surprise, considering none of the big companies thought consumers would buy a TV or washing machine without the touch-and-feel experience of the product in the store. Online volume sales grew 50-60% last year over the previous, industry executives said. This is in comparison to GfK’s estimate of 1% volume growth in overall domestic appliance market and 5% by value in the offline channel.
Online sales accounted for 20% of flat panel television sales volume in 2018, 30% convection microwave ovens, 10% of washing machines and 9% air-conditioners, as per GfK. For refrigerators, e-commerce accounted for around 5% of total sales. Online sales account for 35% of total Indian sales volume of smartphones.
“Online channel has registered significant growth in 2018 across categories in this sector and is now being viewed by players as one of the important channels to operate in the market,” said Nikhil Mathur, managing director – India at GfK.
“Key growth drivers for this industry are increased affordability, focus on energy efficient products, increasing digital penetration and rise in aspiration.”
Industry executives said the contribution of online has almost doubled over 2017, led by the price-aggressive brands like Xiaomi, TCL, BPLNSE -3.18 %, Vu and Thomson in television while brands like Samsung, BoschNSE 0.00 % and SiemensNSE -0.54 % drove online appliance sales.
Online exclusive BPL India’s COO Manmohan Ganesh said the top e-commerce marketplaces have managed to gain consumer confidence whereby customers have shed the inhibition to buy electronics online. “They have also invested heavily on marketing unlike any offline retailer. However, the inhibitions are still there in smaller towns,” he said.
Godrej Appliances business head Kamal Nandi said online today is like what modern retail was few years back when it was growing at high double digit pace but has now stabilised. “We feel online contribution in overall appliance sales has reached the threshold in India of 7-8% as in developed nations. Unless e-commerce makes deep penetration in up-country towns, which is a logistic challenge for consumer durables, online contribution to overall sales may not move much. Also, there might be an impact of the recent change in e-commerce policies restricting discount,” said Nandi.
GfK estimates that online sales last year helped the overall television category to grow since offline sales had declined by 2%. Online is also becoming bigger for washing machine and refrigerators with more brands focussing on such sales, the tracker said. For microwave ovens, while offline sales declined 2% over 2017, online grew phenomenally which converted the offline decline to a single digit growth.
This comes as a surprise, considering none of the big companies thought consumers would buy a TV or washing machine without the touch-and-feel experience of the product in the store. Online volume sales grew 50-60% last year over the previous, industry executives said. This is in comparison to GfK’s estimate of 1% volume growth in overall domestic appliance market and 5% by value in the offline channel.
Online sales accounted for 20% of flat panel television sales volume in 2018, 30% convection microwave ovens, 10% of washing machines and 9% air-conditioners, as per GfK. For refrigerators, e-commerce accounted for around 5% of total sales. Online sales account for 35% of total Indian sales volume of smartphones.
“Online channel has registered significant growth in 2018 across categories in this sector and is now being viewed by players as one of the important channels to operate in the market,” said Nikhil Mathur, managing director – India at GfK.
“Key growth drivers for this industry are increased affordability, focus on energy efficient products, increasing digital penetration and rise in aspiration.”
Industry executives said the contribution of online has almost doubled over 2017, led by the price-aggressive brands like Xiaomi, TCL, BPLNSE -3.18 %, Vu and Thomson in television while brands like Samsung, BoschNSE 0.00 % and SiemensNSE -0.54 % drove online appliance sales.
Online exclusive BPL India’s COO Manmohan Ganesh said the top e-commerce marketplaces have managed to gain consumer confidence whereby customers have shed the inhibition to buy electronics online. “They have also invested heavily on marketing unlike any offline retailer. However, the inhibitions are still there in smaller towns,” he said.
Godrej Appliances business head Kamal Nandi said online today is like what modern retail was few years back when it was growing at high double digit pace but has now stabilised. “We feel online contribution in overall appliance sales has reached the threshold in India of 7-8% as in developed nations. Unless e-commerce makes deep penetration in up-country towns, which is a logistic challenge for consumer durables, online contribution to overall sales may not move much. Also, there might be an impact of the recent change in e-commerce policies restricting discount,” said Nandi.
GfK estimates that online sales last year helped the overall television category to grow since offline sales had declined by 2%. Online is also becoming bigger for washing machine and refrigerators with more brands focussing on such sales, the tracker said. For microwave ovens, while offline sales declined 2% over 2017, online grew phenomenally which converted the offline decline to a single digit growth.
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