India's e-tailing set for intense competition

The ecommerce war is all set to intensify during this festive season. First signs of the competition are already visible. Walmart-owned Flipkart last Saturday advanced its flagship Big Billon Days festive season sale to October 3 from October 7 announced earlier. Interestingly, Amazon, which has announced to hold its month-long festive from October 4, also advanced its sale to begin from October 3. Both ecommerce giants holding their flagship annual sales events on the same date speak volume about the level of competition between the two players. These flagship Diwali sales events are of utmost importance to the two e-tailers companies. Usually, these ecommerce giants achieve a sizeable portion of their annual Gross Merchandise Value (GMV) during these sales. Gross GMV refers to the total value of goods sold on an ecommerce platform prior to subtracting cancellation or return. According to the consulting firm RedSeer, ecommerce platforms like Amazon, Flipkart and others are expected to potentially clock over $9 billion GMV during the festive season this year as against $7.4 billion last year - a growth of 23 per cent. This rise in GMV is expected by the consulting firm as this year Big Days sales are coming after a devastating second wave of pandemic. With the rise in vaccination, the Indian economy is slowly coming back to normalcy. As spending power rises, e-tailers hope to cash in the pent-up demand among consumers during this year's annual festive sales event. Therefore, there is an intense competition among ecommerce players to take maximum mileage from this scenario. Moreover, the urgency to hold these sales events earlier is also understandable. As India opens up, consumers will have the options to buy products through offline route. Therefore, e-tailers want to hold the events early before offline retailers open up fully. Additionally, Flipkart and Amazon are competing aggressively to garner more market share in India. And these sales events give enough scope to gain market share. So, both companies holding their annual sales events on the same day is an indication to emerge as the market leader in the Indian ecommerce space. The Indian ecommerce landscape is also rapidly evolving. Major players like Reliance and Tata are making big moves to have their share of pie in this space. Tata's acquisition of BigBasket and its initiative to build a super app; Reliance's acquisition of Urban Ladder are signs that the big corporate houses want an aggressive play in the Indian ecommerce space. Recent successful listing of new age internet startups with dozens readying to go public indicate that large corporates are sensing the investors' mood and pump in billions in coming years. The current pandemic has accelerated the adoption of digital platforms across India. Even people in the hinterland are coming to the ecommerce fold and opting to buy products from these platforms. Given the penetration of the ecommerce sector, it has much more steam left in coming years. And at this point of time, from Amazon, Flipkart to BigBasket and JioMart, each player is aggressively pushing their limits to emerge as a dominant player.

E-commerce destinations are now competing with social media networks and OTTs

The Covid-19 pandemic has boosted the adoption of e-commerce in India. Interestingly, the majority of respondents shopping online tried at least two new e-commerce shopping sites/apps in the past year, the report titled ‘The rise and rise of E-Commerce in India,’ by Tonic Worldwide’s insights division GIPSI, revealed. The rise has been led by several categories such as social commerce, conversation commerce, homegrown small commerce, delivery commerce, video commerce, sustainable commerce, thrift commerce, gift commerce, creator commerce, among others.

As per the report, currently there are 1103 most used e-commerce apps in India and shopping apps have today captured the mobile home screens and they have made it to the top four categories in the list of Most Used Mobile Apps in India, in 2021. Every month approximately 6,20,000 searches take place for social commerce, increasing month-on-month. With the average Indian today spending about 2.25 hours on social media everyday, commerce has become content now.

Interestingly, about 54% of product searches take place on Amazon, with respondents attributing to the same, rather than using a search engine. Moreover, there is a rise of experience in e-commerce. “Today, from chatbots, live videos, conversation commerce to AR features, the options are plenty. Inclination towards conversational commerce is on the rise, with 79% increase in industry-led conversations on decoding conversational commerce, and the technologies involved,” the report added.

What’s more, e-commerce destinations are now competing with social media networks and OTTs, with customers spending more and more time on these shopping destinations. Soon, this experience will replicate malls – with the option to watch movies, shop and order food, all in an ‘e-comm mall.’

Moreover, visual platforms are seeing a whopping surge across all the platforms. For instance, preference for ‘Instagram shopping’ rules the roost, followed by Facebook, Youtube and Pinterest. There’s also a strong inclination towards Pinterest shopping, with 799% growth. Led by the creator economy phenomenon, e-commerce reviews are also determined by social media creators’ reviews and recommendations which can make or break brands on digital. There has been a 1447% increase in conversations, with a three times positive sentiment and further 25,000 conversations specifically on reviews and recommendations on e-commerce destinations.

The boom of small commerce has seen an immense growth with creators, home businesses and local stores which have moreover taken their consumer experience completely online, with over 155% increase in adopting Whatsapp catalogues and over 46% increase in Shopify app downloads. This thriving space has seen over 1.5 million searches on topics related to build or set up e-commerce websites, free tools and related queries. Further, there has been a growth of over 73% in monthly active users of popular hyperlocal delivery players from the beginning of 2021 – to now. Furthermore, there has been a rise of ‘eco-activism’ in e-commerce, witnessing an over 50% surge in conversations around the topic and specifically 8,33,000 conversations on eco-friendly and sustainable packaging, this conscious shopping behaviour is now on the rise.

“Who knew that the biggest barrier ‘contactless shopping’ will become the biggest trigger for the rise and rise of e-commerce. With abundant data, there is no looking back on the reasons to adopt commerce on digital. Trends are available to all but brands which identify undercurrents will have an advantage. Our GIPSI report is for anyone who is riding, considering or fearing the rise and rise of e-commerce,” Anjali Malthankar, national strategy director, Tonic Worldwide said.

For Unmisha Bhatt, chief strategy officer and director – India and MENA region, Tonic Worldwide, in the last year and a half, e-commerce and digitisation has been a game changer for multiple companies of all sizes. “In an effort to accelerate their business, GIPSI’s ecommerce insights report focuses on ways and means to see higher growth by adopting best practices,” Bhatt stated.

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.

Draft e-Commerce Rules 2021: Why aren't all ministries on the same page?

A top government official recently told a news agency that there was a significant difference of opinion within the government regarding the draft e-commerce rules proposed by the consumer affairs ministry.

The finance ministry, in particular, has raised strong objections.

But, this isn't just about a difference of opinion between different arms of the government.

Instead, it is in line with the trend of sharp disagreements between government departments on the one hand and Sangh Parivar-affiliated organisations on the other.

But first, let us understand some of the contentious points in the draft e-commerce rules, and what the finance and other ministries have to say about the policy?

E-commerce companies have raised concerns over a clause that says they will have to ensure none of their associated enterprises is listed as a seller. For example, Tata won't be able to sell Starbucks products on its upcoming Super App. Starbucks operates in India through a 50:50 joint venture with Tata Consumer Products.

Also, under the fallback liability clause, e-commerce firms will be held liable in case a seller on their platform fails to deliver goods or services due to any negligent conduct that causes loss to the customer.

Industry fears a change in the e-commerce business model, should the draft rules be implemented. Small businesses fear there might be an increase in compliance burden. Also, the rules ban e-commerce flash sales, there is no clarity on what constitutes flash sales.

The finance ministry, the ministry of corporate affairs, and NITI Aayog have all raised objections.

NITI Aayog Vice-Chairman Rajiv Kumar has said that the proposed rules send the message of unpredictability in policy-making. And the finance ministry has called the rules "excessive", adding that these would hit a sector that could boost job creation and tax revenue, and also hamper 'ease of doing business'.

The Ministry of Corporate Affairs opposes the clause that says e-commerce firms should not abuse their dominant position in India. Calling the provision "unnecessary and superfluous", it has said it is undesirable to introduce a mini-competition law regime in the rules.

According to Business Standard's Nivedita Mookerji:-

• Govt wants to show it is not 'anti-industry'
• Clamping down on flash sales, holding e-tailers accountable for sellers' violations will be counter-productiveTata Group had joined Amazon and Flipkart in opposing the rules
• Difficult to ignore opinion of tata Group, which has put in a bid to acquire Air India
• New ecommerce rules may make Tata's 'super app' plans a difficult business

However, the Confederation of All India Traders or CAIT has firmly backed the new Rules.

Previously, it had criticised the Niti Aayog for "interfering" in the e-commerce rules proposed by the consumer affairs ministry.

CAIT had also alleged that since its inception, Niti Aayog had done "absolutely nothing" to support the 80 million traders of India.

In a statement to Business Standard, CAIT national general-secretary Praveen Khandelwal also aimed fire at the finance and other ministries for opposing the draft rules.

"Today, Niti Aayog is pointing fingers at the e-commerce rules but it did not utter a single word when the laws were being violated by these big e-commerce goons. Was it not the duty of NITI Aayog to ask them to follow the rules strictly? The same is the case with other ministries and departments. Today, they are poking their nose. Why did they keep quiet when these companies were continuously flouting the rules," Khandelwal said.

Khandelwal is, of course, referring to the very serious allegations against Amazon and Flipkart of giving preferential treatment to a few seller entities in which they indirectly held stakes.

Importantly, this is not the first time that we've seen such disagreements between the government and other bodies or associations that are not involved in policy making but share the ruling party's ideology.

Well, the disagreement may seem unpleasant right now. But who's to say it's wrong or unhealthy. If the concerns of all ministries can be addressed and stakeholders' suggestions be incorporated, we'll obviously have a better policy.

Earlier this month, reports suggested that because of the pushback, the government was taking a second look at the draft rules.

However, in a recent public statement, the Piyush Goyal-led consumer affairs ministry, which has drafted the rules, appeared to be holding its ground on the draft rules.

Amazon India to host 'Great Indian Festival 2021' from Oct 4

Amazon India on Friday said it will kick off its festive season sale - The Great Indian Festival (GIF) - from October 4, that will see participation from lakhs of small sellers, including over 75,000 local shops. "This year's Great Indian Festival is a celebration of the resilience of local shops and small and medium sellers. We are humbled by their spirit and delighted with the opportunity to partner and enable their growth, especially in view of recent challenges owing to the pandemic," Amazon India Vice President Manish Tiwary told reporters.

He added that the company continues to innovate and offer the widest selection, value and convenience, while ensuring fast delivery as customers gear up for the festive season.

Amazon India has over 8.5 lakh sellers on its marketplace.

Festive season sees players holding multiple sale events, timed around Dussehra and Diwali.

Rival, Flipkart will host its annual 'The Big Billion Days' sale from October 7-12 this year. Amazon's GIF, however, will be a month-long event.

GIF 2021 will include over 1,000 new product launches from brands such as Samsung, OnePlus, Xiaomi, Levi's, Adidas, American Tourister, Pedigree and others.

The event will also include products from Amazon sellers under various programs like Amazon Launchpad, Amazon Saheli and Amazon Karigar.

Tiwary cited a recent study commissioned by the company and conducted by Nielsen to state that sellers on Amazon.in are optimistic about this festive season, and that 98 per cent of the surveyed sellers said technology adoption and e-commerce have positively impacted their business.

E-commerce companies see a large chunk of their business coming in during the festive sales and they make significant investments ahead of time to ramp up their capacity and add features to be able to handle the spike in orders, while ensuring a smooth experience for shoppers and sellers.

According to consulting firm RedSeer, e-commerce platforms are expected to potentially clock over USD 9 billion gross GMV (Gross Merchandise Value) during the festive season this year as against USD 7.4 billion last year - a growth of 23 per cent.