Credit boosts festive sales on Amazon as 25% of purchases made on EMI, says senior exec

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At a time when e-commerce players are trying to drive premiumisation to increase profitability, Amazon boosted its festive sales by pushing more credit-linked purchases.

This happened as customers got more than Rs 600 crore of card discounts given by banks on the online marketplace during the festive period, while 25 percent of all purchases were made through EMIs, according to a senior executive with the e-commerce major.

“The number of avenues to get credit has increased — be it from banks, NBFCs, or pay-later players. This has allowed consumers to be a lot more open to bigger purchases,” said Kishore Thota, director of shopping experiences at Amazon.

“How do you support the customers to extend their budgets to make the shift towards premiumisation? What we're seeing is having these partnerships with the banks and having more credit items available means that customers are able to extend their budget a lot more,” Thota said.

The festive season has helped e-commerce sales stage a strong comeback on the back of more premium purchases made by consumers in categories like mobiles and large appliances, according to industry players. The premiumisation trend was not limited to just metro cities. Even Tier 2 and regions beyond that looked for branded items, especially in fashion, beauty and the like.

“What we have observed is that premiumisation is not only a Tier 1 phenomenon. We have seen a move to digital and product upgradation. For example in television sets, we saw a move from cathode ray tube to LED, then from LED to QLED and so on. And, the fundamental reasons for that are affordability, selection and convenience of deliveries around the country,” Thota said.

However, the Amazon executive contended that the shift to more premium purchases is not just limited to electronics, but is also happening in categories like grocery. For example, consumers are seen upgrading from unprocessed mustard oil to costlier variants like cold-pressed.

“When the selection is offered to consumers, we see them migrating very aggressively to more premium products… By the way, EMIs are not just limited to very high priced items only. It can also happen on a sufficiently big basket of products that fulfills certain qualifying criteria,” he said.

The company said that customers from 99.7 percent of the country’s PIN codes shopped during the month-long celebrations with 80 percent of the customers shopping from tier 2 and 3 towns like Jalandhar, Kolhapur, Midnapore and Visakhapatnam.

More importantly, over 65 percent of Amazon Prime members — the subscribers of its premium loyalty programme – shopped during the festive season were from tier 2 and 3 cities and towns.

"We witnessed the highest ever demand observed for categories like jewelry, premium smartwatches where new products jumped nearly five-fold. Luxury beauty category witnessed an up to 8x spike with increased demand for international brands within fragrances, professional beauty," the Amazon executive said.

The e-commerce platform also recorded the highest ever customer visits during the festive season, as the metric rallied 10 percent on-year to 110 crore.