Tuesday 28 September 2021

Flipkart, Amazon set to intensify battle in festive season

Over the weekend, the two largest ecommerce platforms in India – Flipkart and Amazon India – did something unusual.

Walmart-owned Flipkart said it had advanced its flagship Big Billion Days festive season sales event to October 3 from October 7 earlier, after Amazon announced that it would begin its month-long festive sale from October 4.

Then, on Sunday morning, Amazon India said it, too, would start the sale from October 3, taking its fight with the homegrown rival head on.

Diwali sales for ecommerce firms have always been important from a gross sales perspective, but the intense competition between the two firms, culminating in the rapid response to make back-to-back changes in their sales dates is reminiscent of earlier keenly fought battles between India’s largest startup and the US-based corporation.

For example, in 2016, Flipkart cofounder Binny Bansal had taken a direct dig at Amazon, saying the ecommerce company did not sell ‘hing’ (Asafoetida) and ‘churan’ (digestive powder) to boost sales volumes during the festive season.

Amazon was stung, with even a reticent Amit Agarwal, its India head, firing back saying their single-minded focus on the end-consumer meant it would sell everything they wanted during the festive season - from smartphones to consumables.

ET spoke to multiple sources to understand what made both the e-tailers advance their sales events and react publicly to each other's moves.

The Covid-19 pandemic has aided online commerce, but the e-tailers do not want to get in late to tap into consumer demand by starting later than the other, people aware of the issue said.

The fear of a potential Covid-19 third wave had also led to the change in dates as the e-tailers were clearly trying to outdo each other, they said.

“There is a good swing in sales in ecommerce but neither of them want to miss out on the consumer demand or leave it too late for one to have an advantage over the other. There is internal research that has shown consumers compare across these two platforms and it’s important to have the sales around the same time and not with a gap of one week,” a person aware of the change in plans by the e-tailers said.

Another person said while consumers are ready to spend, it is unsure whether they would show the same appetite to sustain that spending for more than a week after a rival platform has gone aggressive with its sales plan. “It was as simple as that. They didn’t want to run the risk of losing out when consumers are ready to spend; what if a third-wave brings up an unpleasant surprise?” this person said.

This is also happening when ecommerce is seeing entry of two large conglomerates like Reliance Industries and the Tata Group.

"Both the eatilers (Amazon and Flipkart) also realise they should get aggressive now because it is no more just about two of them but two new entrants (RIL and Tata) are there and they should just grab as many customers before new entrants go big. They are all fighting for the consumer's wallet and the deal seekers who are looking for better price and delivery. 3rd October is also a Sunday and that could be a huge day for commerce and you don't want to give it away," said TCM Sundaram, founder & MD, at venture capital firm Chiratae Ventures.

Arpit Mathur, partner at management consulting firm Kearney, said there was uncertainty about how consumers would react, with mixed signals coming into play.

“After the second wave, consumers behaved well on ecommerce but then it slowed a bit before picking up. Earlier, you could predict the demand outlook better but that is not easy this year and on a large base. This is also a key time for consumer acquisition and they (e-tailers) wouldn’t want to miss out on that,” Mathur said.

Flipkart and Amazon’s flagship Diwali sales events used to start within a day of each other, but not anymore. Since last year, Amazon has started holding its Diwali sales for a month without going in for its usual five-day Great Indian Festival event.

Both Amazon and Flipkart typically outperform their previous year's festive sales each year. They are confident of a significant festive month but what happened on Sunday has set the stage for an interesting festive season battle this year, industry sources said.

Amazon said the changes were part of its ‘top priority remaining on customer trust and the interest of sellers.’

Flipkart Group CEO Kalyan Krishnamurthy, in an internal note, said the changes in Big Billion Days also reflected Flipkart’s ability to make a ‘deep positive impact on the lives of everyone’ - both consumers as well as sellers - who engage with the platform during the sales.

Multiple sellers told ET that neither of the two platforms had disclosed the dates to them till the last moment.

“We were told it would be early October, that’s all. We prepared accordingly and have moved the dates for a week now. It should not be a major problem,” one of the largest sellers on Amazon India, who also sells on Flipkart, said. “We are hoping for a good Diwali sale with some excitement around. The indications are very positive,” the seller added.

ET reported last week, citing data from market research firm RedSeer, that Flipkart, Amazon and others could log in record gross merchandise value (GMV) of around $9 billion in the festive sales period.

ET also reported earlier this month that Flipkart Group, including its fashion portal Myntra, were on track to register a healthy 50% growth in its annualised GMV at around $23 billion.

Wealth management firm Bernstein said in a report that Flipkart and Myntra, individually, had clocked a GMV of $12.5 billion and $2 billion, respectively, in 2020 and that Amazon India had run up a GMV of $11.5 billion during the same period.

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