Monday 2 September 2019

E-tailers look to beat slowdown blues riding on festive highs

E-tailers look to beat slowdown blues riding on festive highsBENGALURU: E-commerce companies are hoping they will be able to buck the downturn in the economy during the muchanticipated Diwali sales later this month, the biggest sale in a year. 

Over half a dozen industry stakeholders — e-tailers, brands, sellers, analysts — told TOI the upcoming festive sales may not see consumers hold back with their spending unlike in the automobiles sector or fast-moving consumer goods in the rural areas. However, the rate of growth this festive sale might be lower than last year, according to some analysts.

Kicking off the sale season will be Flipkart, which will hold its flagship sale event Big-BillionDays from September 29 to October 2, the Walmart-owned e-tailer has informed sellers. Amazon’s dates for its Great Indian Festival sale are not public yet but it is usually in the same period as Flipkart’s since both compete against each other to corner a higher volume of sales.

Speaking to TOI, Manish Tewary, VP, Amazon India, said the company did not see any signs of a slowdown in its last two sales and expects to double down on the momentum going into the festive season. “We will be launching a range of new products during the Diwali sales. If products were not moving, then there would not be new launches,” he added. Tewary, virtually the second most senior executive in Amazon India, said Amazon will gradually announce these launches in September.

“For any kind of macroeconomic trend to deter e-commerce would be difficult since it’s (online commerce) still relatively small compared to the overall retail market,” he added. Both Amazon and Flipkart have stitched up various partnerships with third-party brands across segments like smartphones, large appliances, electronics and fashion among others. A Flipkart spokesperson did not respond to an email query sent by TOI.

Last year, e-commerce sales grew by 33% during the annual festive sale events, totaling up to $2-2.3 billion, market research companies like Forrester and RedSeer had said. So far, these agencies have not come out with a formal statement, but Forrester’s senior forecast analyst Satish Meena said this year the sales growth could be about 20%. RedSeer told TOI it is expecting at least as much growth as last year during the five-day sale when Amazon and Flipkart start their respective events.

Raghu Reddy, head of Xiaomi’s categories and online sales in India, echoed Tewary. “Based on shipment numbers, both the first quarter and second quarter have grown compared to 2018. So, based on this, one would assume the trend would continue in the festive sales,” he said. Xiaomi is one of the largest selling smartphone players across online and offline channels. For Flipkart, an additional worry could be that about 35 of its sorting centers across the country are not functioning as they have not met compliance standards as per local laws. This may affect the overall pace of delivery, people aware of the matter said.

While companies and brands sound confident of clocking good sales, some executives are also being cautious about the sale estimates. “Retail sales have been low single-digit in the offline stores. There will be an additional volume of old season merchandise in fashion across online platforms. This may trigger extra discounting on these items, but brands are anxious about the overall dip in average spending by consumers,” the chief executive of an apparel brand said. A New Delhi-based seller also said he was anticipating an impact on overall volumes but they wont’s get hit as much as other consumer sectors.

For fashion brands, e-tailers typically sell a mix of old and new season merchandise. Fashion brands restrict some of their new season merchandise to the offline stores for consumers who want to buy the new arrivals, willing to pay a premium.

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