BENGALURU: India’s two largest online marketplaces, Flipkart Group and AmazonIndia, are expected to register 25-27% sales growth during the crucial festive season, lower than last year, owing to sluggish consumer sentiment, a slowing economy and greater uncertainty around regulations implemented this year.Latest growth numbers projected by logistics companies and sector analysts have been revised downwards from earlier in the year, said people in the know.
Last year, the e-commerce industry registered a 35% gross merchandise value (GMV) growth and racked up sales of $3 billion during the festive season, as per estimates.
Flipkart and Amazon India, though, are maintaining aggressive targets and expecting to clock a combined GMV of about $5 billion (Rs 36,000 crore) in October, four top executives from these companies said on condition of anonymity.
However, independent estimates peg this figure at $3.7-4 billion. “There is a 15-20% downward revision in estimates compared with earlier projections. A lot of it has to do with the economic slowdown and regulatory environment affecting the two big companies —Amazon and Flipkart — as they may have under-invested in inventory,” said an industry executive on condition of anonymity.
GMV Growth Will Be Impacted: Experts
The market share split is expected to remain at 60% for Flipkart Group — including Myntra, Jabong and 2GUD— and 40% for Amazon India, executives cited above said.
GMV is the overall sales clocked by an online marketplace, and does not include discounts, returns, cancellations and cashbacks on products sold. It is different from revenue generated. Flipkart and Amazon do not officially disclose GMVs.
“Even if the market is a bit slow, this will be our biggest Big Billion Days in terms of the number of customers transacting and engaging with us. We are bringing in more brands and will see more cities and newer customers from new demographics coming to Flipkart through our Hindi app,” said Rajneesh Kumar, chief corporate affairs officer, Flipkart.
“With selections from top brands, great deals and financing choices to make products affordable, we look forward to celebrating the festive season with many more customers this year,’ said an Amazon spokesperson.
The annual festive sale next month will be the first large event for these e-tailers after the revised e-commerce policy kicked in from February 1. Press Note 2, issued in December last year, bars online marketplaces and their group companies from owning their vendors, and prohibits them from controlling inventory sold on their platforms.
Satish Meena, analyst, Forrester Research, said, “Ecommerce companies will be more aggressive with marketing to push sales, since the first half of the year was muted by regulatory and compliance hurdles. This is the last window to push up sales and customer reach.” He expects sales volume to increase 20% on-year, excluding services such as flights and hotel bookings. Meena said etailers will be affected by the economic slowdown, albeit on a lower scale than offline retail.
GMV growth will also be impacted because companies are pushing cheaper and unbranded merchandise, which has lowered the overall order value, industry experts said.
Last week, ET reported that Flipkart plans to launch exclusive products during its flagship Big Billion Days sale, along with running contests and cross-selling across categories. It has also urged top brands to give 50-70% discounts and make buy-one-get-one-free offers.
Amazon too plans to offer two-hour delivery for high-value items such as smartphones, electronics, furniture and high-repeat items such as grocery, with a focus on Prime Now app in top cities, sources said.
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