India’s ecommerce festive season sales to top $9 billion in 2021

India’s ecommerce sales during the upcoming festive season are likely to grow by nearly a quarter over the previous year to $9 billion, a new report has indicated, underscoring the demand boost that etailers have seen during the pandemic.

For the full year, the overall net gross merchandise value is expected to touch $49-52 billion, or 37% higher than last year’s $38.2 billion, management consultancy RedSeer Consulting has said in 'Ecommerce Festive Season Report'. In the first week of the festive season, online platforms are expected to register 30% year-on-year growth in gross GMV to $4.8 billion.

Gross GMV refers to the total value of goods sold on online before cancellations or returns, if any.

"The growth will be mostly driven by the accelerated online adoption which has been witnessed as an effect of covid,” said Mrigank Gutgutia, associate partner at RedSeer. “Secondly, Tier-II cities and beyond will continue to drive growth as they are 55-60% of the total shopper base this year, similar or higher than 57% in 2020 festive days.”

On the other hand, as offline retail and mobility recovers to pre-pandemic levels, this willi impact online festive sales as customers may opt for offline shopping as well, he added.

Mobile phones will continue to dominate ecommerce sales, accounting for 11% ($4.8 billion) of Gross GMV in the first week of the festive season sales.

The electronics/appliances category will continue to grow—from 14% share in 2020 to 16% in 2021—driven by ever-expanding selection and reach, and consumers holding back their purchases in anticipation of new launches and attractive pricing.

Affordability constructs, including equated monthly installments (EMIs) and “buy now, pay later” (BNPL), are expected to be a strong growth lever.

Online fashion is also likely to see a steady recovery—in line with greater outdoor mobility of consumers and steady rebound of fashion/office wear.

The report found that sellers are very bullish on this year's sales and are looking to recover losses suffered due to the pandemic. Nearly 80% of the sellers surveyed said festive sales will play a key role in recovery from lockdown-related losses.

"We believe that the 2021 online festive sales will continue to ride on strong tailwinds of greater consumer digital adoption, supported by an increasingly positive macroeconomic and consumption sentiment post the second wave,” said Ujjwal Chaudhry, consulting associate partner at RedSeer.

“At the same time, we see strong bullishness in sellers towards online festive sales as about 80% of them believe that the festive sales will enable them to drive strong sales growth and make up for the losses during the covid period.”

India’s plan for tighter e-commerce rules face internal govt dissent

India's plan to tighten rules on its fast-growing e-commerce market has run into internal government dissent, memos reviewed by Reuters show, with the Ministry of Finance describing some proposals as "excessive" and "without economic rationale".

The memos offer a rare glimpse of high-stakes policy-making governing a market already featuring global retail heavyweights from Amazon to Walmart, plus domestic players like Reliance Industries and Tata Group. The sector is forecast by Grant Thornton to be worth $188 billion by 2025.

It's not clear how the objections from the finance ministry - a dozen in total - will ultimately be reflected in the proposed rule changes, first floated in June. But watchers of the influential government arm say its complaints won't fall on deaf ears in the upper echelons of Prime Minister Narendra Modi's administration.

"The ministry of finance raising such concerns would likely spur a rethink of the policy," said Suhaan Mukerji, managing partner at India's PLR Chambers, a law firm that specialises in public policy issues.

India in June shocked the e-commerce world with proposals from its consumer affairs ministry that sought to limit 'flash sales', rein in a push to promote private-label brands push and raise scrutiny of relationships between online marketplace operators and their vendors. There is not yet a formal implementation timeline for the new rules.

Though the rules were announced after complaints from brick-and-mortar retailers about alleged unfair practices of foreign companies, they also drew protest from Tata Group, with more than $100 billion in revenue https://reut.rs/3hQinGB, which is planning an e-commerce expansion.

But the finance ministry, the ministry of corporate affairs and the federal think-tank NITI Aayog - an active player in policy-making - have all raised objections in memos reviewed by Reuters, saying the proposals go far beyond their stated aim of protecting consumers and also lack regulatory clarity.

An Aug. 31 memo from the Finance Ministry's Department of Economic Affairs said the rules appeared "excessive" and would hit a sector that could boost job creation as well as tax revenue.

"The proposed amendments are likely to have significant implications/restrictions on a sunrise sector and 'ease of doing business'," said the three-page memo. "Care needs to be taken to ensure that the proposed measures remain 'light-touch regulations'."

The finance ministry did not respond to Reuters' requests for comment.

A spokesman for India's consumer affairs ministry said in a statement that "internal discussions among various stakeholders including government agencies is (a) sign of mature and healthy decision making process in a democracy."

'UNPREDICTABILITY' IN POLICY-MAKING

Voicing its own objections on July 6, NITI Aayog's vice chairman, Rajiv Kumar, wrote to Piyush Goyal, who is minister for commerce as well as consumer affairs minister, saying the rules could hit small businesses.

"Moreover, they send the message of unpredictability and inconsistency in our policy-making," Kumar wrote in the letter, a copy of which was reviewed by Reuters.

Minister Goyal and NITI Aayog's Kumar did not respond to Reuters requests for comment.

The arguments put forth by the finance ministry and NITI Aayog are in line with concerns raised by sector operators, and even the U.S. government https://reut.rs/2n6rBoM. They say New Delhi has in recent years changed e-commerce policies too often and taken a hard-line regulatory approach that especially hurts American players.

But Indian consumer affairs minister Goyal https://reut.rs/39lsazN and brick-and-mortar retailers disagree and have repeatedly said big U.S. firms have bypassed Indian laws https://reut.rs/3EBODqI and their practices hurt small retailers.

The consumer affairs ministry has said the new rules were aimed to "further strengthen the regulatory framework" and were issued after complaints of "widespread cheating and unfair trade practices being observed in the e-commerce ecosystem."

Its statement said a large number of state governments, industry bodies, e-commerce companies and others have supported the regulations and the ministry wants to have the best workable rules for consumers and business.

FLASH SALES, REGULATORY OVERLAP

But the proposals have met with resistance in more than one ministry.

In a July 22 memo, the corporate affairs ministry objected to one proposed clause to be enshrined in new rules that says e-commerce firms should not abuse their dominant position in India. The ministry said the provision was "unnecessary and superfluous", and that the subject was best handled by India's antitrust watchdog.

"It is undesirable to introduce a mini-competition law regime in the consumer" rules, said the memo. The corporate affairs ministry did not respond to Reuters requests for comment.

The finance ministry has taken a much harder stance on the proposals and raised a total of 12 objections.

Among them, it said, a proposal that makes online shopping websites liable for its sellers' mistakes would be a "huge dampener" and could force companies "to revisit their basic business models".

It also lodged a protest against the banning of flash sales, which see deep discounts on offer on websites like Amazon and are popular during festive seasons.

"This is a normal trade practice. The proposed restriction ... seems without economic rationale," the ministry wrote.

Centre divided over e-commerce rules

India’s plan to tighten rules on its fast-growing e-commerce market has run into internal government dissent, memos reviewed by Reuters show, with the ministry of finance describing some proposals as “excessive” and “without economic rationale”.

The memos offer a rare glimpse of high-stakes policy-making governing a market already featuring global retail heavyweights from Amazon  to Walmart, plus domestic players like Reliance Industries and Tata Group. The sector is forecast by Grant Thornton to be worth $188 billion by 2025.

It’s not clear how the objections from the finance ministry — a dozen in total — will ultimately be reflected in the proposed rule changes, first floated in June. But watchers of the influential government arm say its complaints won’t fall on deaf ears in the upper echelons of Prime Minister Narendra Modi’s administration.

“The ministry of finance raising such concerns would likely spur a rethink of the policy,” said Suhaan Mukerji, managing partner at India’s PLR Chambers, a law firm that specialises in public policy issues.

India in June shocked the e-commerce world with proposals from its consumer affairs ministry that sought to limit ‘flash sales’, rein in a push to promote private-label brands and raise scrutiny of relationships between online marketplace operators and their vendors. 

There is not yet a formal implementation timeline for the new rules.

Though the rules were announced after complaints from brick-and-mortar retailers about alleged unfair practices of foreign companies, they also drew protest from Tata Group, with more than $100 billion in revenue, which is planning an e-commerce expansion.

But the finance ministry, the ministry of corporate affairs and the federal think-tank NITI Aayog — an active player in policy-making — have all raised objections in memos reviewed by Reuters, saying the proposals go far beyond their stated aim of protecting consumers and also lack regulatory clarity.

An August 31 memo from the finance ministry’s department of economic affairs said the rules appeared “excessive” and would hit a sector that could boost job creation as well as tax revenue.

“The proposed amendments are likely to have significant implications/restrictions on a sunrise sector and ease of doing business,” said the three-page memo. “Care needs to be taken to ensure that the proposed measures remain ‘light-touch regulations’.”

The finance ministry did not respond to Reuters’ requests for comment.

India plan for tighter e-commerce rules faces internal government dissent -documents

India's plan to tighten rules on its fast-growing e-commerce market has run into internal government dissent, memos reviewed by Reuters show, with the Ministry of Finance describing some proposals as "excessive" and "without economic rationale".

The memos offer a rare glimpse of high-stakes policy-making governing a market already featuring global retail heavyweights from Amazon (AMZN.O) to Walmart (WMT.N), plus domestic players like Reliance Industries (RELI.NS) and Tata Group. The sector is forecast by Grant Thornton to be worth $188 billion by 2025.

It's not clear how the objections from the finance ministry - a dozen in total - will ultimately be reflected in the proposed rule changes, first floated in June. But watchers of the influential government arm say its complaints won't fall on deaf ears in the upper echelons of Prime Minister Narendra Modi's administration.

"The ministry of finance raising such concerns would likely spur a rethink of the policy," said Suhaan Mukerji, managing partner at India's PLR Chambers, a law firm that specialises in public policy issues.

India in June shocked the e-commerce world with proposals from its consumer affairs ministry that sought to limit 'flash sales', rein in a push to promote private-label brands and raise scrutiny of relationships between online marketplace operators and their vendors. There is not yet a formal implementation timeline for the new rules.

Though the rules were announced after complaints from brick-and-mortar retailers about alleged unfair practices of foreign companies, they also drew protest from Tata Group, with more than $100 billion in revenue, which is planning an e-commerce expansion.

But the finance ministry, the ministry of corporate affairs and the federal think-tank NITI Aayog - an active player in policy-making - have all raised objections in memos reviewed by Reuters, saying the proposals go far beyond their stated aim of protecting consumers and also lack regulatory clarity.

An Aug. 31 memo from the Finance Ministry's Department of Economic Affairs said the rules appeared "excessive" and would hit a sector that could boost job creation as well as tax revenue.

"The proposed amendments are likely to have significant implications/restrictions on a sunrise sector and 'ease of doing business'," said the three-page memo. "Care needs to be taken to ensure that the proposed measures remain 'light-touch regulations'."

The finance ministry did not respond to Reuters' requests for comment.

A spokesman for India's consumer affairs ministry said in a statement that "internal discussions among various stakeholders including government agencies is (a) sign of mature and healthy decision making process in a democracy."

'UNPREDICTABILITY' IN POLICY-MAKING

Voicing its own objections on July 6, NITI Aayog's vice chairman, Rajiv Kumar, wrote to Piyush Goyal, who is minister for commerce as well as consumer affairs minister, saying the rules could hit small businesses.

"Moreover, they send the message of unpredictability and inconsistency in our policy-making," Kumar wrote in the letter, a copy of which was reviewed by Reuters.

Minister Goyal and NITI Aayog's Kumar did not respond to Reuters requests for comment.

The arguments put forth by the finance ministry and NITI Aayog are in line with concerns raised by sector operators, and even the U.S. government. They say New Delhi has in recent years changed e-commerce policies too often and taken a hard-line regulatory approach that especially hurts American players.

But Indian consumer affairs minister Goyal and brick-and-mortar retailers disagree and have repeatedly said big U.S. firms have bypassed Indian laws and their practices hurt small retailers.

The consumer affairs ministry has said the new rules were aimed to "further strengthen the regulatory framework" and were issued after complaints of "widespread cheating and unfair trade practices being observed in the e-commerce ecosystem."

Its statement said a large number of state governments, industry bodies, e-commerce companies and others have supported the regulations and the ministry wants to have the best workable rules for consumers and business.

FLASH SALES, REGULATORY OVERLAP

But the proposals have met with resistance in more than one ministry.

In a July 22 memo, the corporate affairs ministry objected to one proposed clause to be enshrined in new rules that says e-commerce firms should not abuse their dominant position in India. The ministry said the provision was "unnecessary and superfluous", and that the subject was best handled by India's antitrust watchdog.

"It is undesirable to introduce a mini-competition law regime in the consumer" rules, said the memo. The corporate affairs ministry did not respond to Reuters requests for comment.

The finance ministry has taken a much harder stance on the proposals and raised a total of 12 objections.

Among them, it said, a proposal that makes online shopping websites liable for its sellers' mistakes would be a "huge dampener" and could force companies "to revisit their basic business models".

It also lodged a protest against the banning of flash sales, which see deep discounts on offer on websites like Amazon and are popular during festive seasons.

"This is a normal trade practice. The proposed restriction ... seems without economic rationale," the ministry wrote.

Voice to Cart: The Game Changer for E-commerce in India

We have 628 million smartphones, 450 million Paytm users but only 130 million active users. We have over 2.8 billion UPI transactions, but how many of them are for e-commerce? There are only 88 million e-commerce customers.  Only 4 out of 10 installs will get a customer who buys anything. 

This is because most people in India are not comfortable using e-commerce apps due to their UI complexity. So, if e-commerce is a key channel for sales for any brand, there is a gigantic customer base that is not being addressed today. 

Voice is to this decade, what mobile apps were to the previous decade - the biggest growth explosion lever for e-commerce companies to acquire 400 million new customers in India alone. 

It’s no surprise that many prominent e-commerce players like Amazon, Flipkart, and Jio have started experimenting with it by adding their home-grown in-app voice assistants. Similarly, companies like Big Basket, Udaan, and P&G are working with some cutting-edge startups to add in-app voice assistants to their own apps. So, let’s see what the top use cases are being powered by voice assistants in popular e-commerce apps.

Multilingual Voice Search

Search is the most widely used feature in any e-commerce application, but it also acts as a major drop-off point in a consumer’s purchase path while they discover new items. Here are the most common reasons customers drop off during search –
- Typing  - Typing is painful, especially on a smartphone keyboard; requires English spelling mastery, and typing vernacular words in English is fuzzy in spellings (aalu, aloo).
- English -  People generally think of items in their native language and try to type them out, but the SKUs are usually indexed with the English version of the word.

Typing is a hurdle, especially with non-English languages.
- Spelling Challenges - Spelling out complicated terms is tough.
- Product Discovery - Auto suggestions are great, but they limit the customer to popular items and prevent the discovery of newer or less frequently purchased items.
- Synonyms  -  People might not always know the exact item they want and might use a word with a similar meaning (‘low-fat’ > ‘skim’)
- Filters - It’s natural to apply filters in search, but currently, most apps expect filters to be an explicit UI operation. Customers have to engage in two separate activities to get the result they want (*'blue jeans under Rs 2,000'*)

Voice-powered search eliminates most of these issues and also makes repetitive voice search for even power users much faster - by up to 33 percent - compared to usual touch and type interfaces.

Voice to Cart in a Single Step!

Voice enables people to complete their tasks on apps much faster by letting them speak a single command which otherwise would have been a multi-step process. 

For example: ‘Add 2 kgs of Aashirvaad aata’ (In this case, it’s now possible to identify the actual SKU and the quantity and add it to the cart directly). 

The ability to do this entire action in one command is 3X faster than manually adding each item. Now, imagine building a monthly grocery list of 40 items in a grocery shopping app!

Voice Promotions

Voice promotions are just-in-time voice nudges that contextually inform the shopper about the availability of offers (‘There is an offer for buy 2 get 1 free. Would you like to buy 2 items instead?’), and then follow up with an explicit yes or no question. This, again, very closely mimics the real-world shopping experience, where the person manning the checkout counter has the best influence to push an offer (‘Ma’am, you could buy 3 of these at 20 percent off?’).

Voice Navigation

Consumers coming online for the first time have a bigger difficulty. This complexity creates a lot of cognitive overload on these first-time consumers causing drop-offs and a reduction in conversion. A person trying to find the delivery status or invoice for purchase will have to perform 4-5 actions minimum - whereas a simple voice command like ‘delivery status’ is 3X-4X faster than touch and type!

Voice Navigation allows consumers to be in control and just speak out what their intent is – ‘fruits and vegetables’, ‘track my order’, ‘show my cart’ or ‘what offers do I have on my credit cards?’ The app then can quickly take them to their destination without them having to figure how to get to that screen themselves.

Hands-free Shopping, Building Shopping Lists, Voice Feedback, and More

There are lots of new capabilities that voice shopping enables that are otherwise not possible. The ability to use the app without having to interact with it constantly (hands-free shopping) or the ability to quickly blurt out their shopping list (list to cart) or the ability to collect better quality feedback by allowing customers to share their experiences by just talking to the app. All these make the app a lot easier and faster to use for your customers - irrespective of their comfort with apps.

In-App Voice Commerce Journey is Just Beginning

There are 1,000X more smartphones in the world than there are smart speakers in homes. That automatically makes the APP the king of all channels to engage and entice your customers to shop with retail brands on a consistent basis. So, making apps faster and more accessible to millions of consumers will only help brands grow their customer base and retention rates rapidly.