Festival-season sales kick off; here's how e-commerce companies have readied themselves to hit the road

Some of India’s biggest sales have kicked off, with the festive season expected to see the most volume of sales. While this season usually starts before Diwali and goes on till about the end of the year, it’s also a period which sees intense competition among e-commerce players.

“We have been able to ensure significant growth in direct employment throughout the festive season year-on-year — 50,000 jobs in 2019, 70,000 jobs in 2020 — and we anticipate continuing the momentum this festive season as well,” said a Flipkart spokesperson.

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The Walmart-owned firm has also added 200,000 Kirana partners for delivery across the country.

Rival firm Amazon, on the other hand, has tied up with the Indian Railways for delivery.

“We have recently strengthened our operational engagement with the Indian Railways, with more than 325 inter-city transportation lanes for the movement of customer packages. This is a 5X increase in railway lanes since we began working with the Indian Railways in 2019 and is one of the enablers for the company to offer 1-day and 2-day delivery promises to customers in the hinterlands of the country,” said an Amazon spokesperson.

However, while a report by research firm RedSeer has said that growth in the sector can be expected at 28 percent, there are still concerns that this season may be tepid. Redseer’s report said that consumer sentiment is bullish this year across city tiers, with over 80 percent of those surveyed looking to make a purchase during this season.

For e-commerce players, there are concerns about inflation impacting consumer purchasing decisions, with the added worry of people being able to freely shop offline for the festive season after two years.

Due to this, some analysts are expecting a festive tepid sale season.

A management consultant had previously told Moneycontrol that since offline purchases are back in vogue, e-commerce sales will now be a function of how the macros play out and the depth of discounts. Large retailers in tier 3 and 4 markets have seen a slump in demand, but that’s not the case with urban retailers.

Arvind Singhal, Chairman of retail consultancy Technopak Advisors, said that he expects consumers to revert to offline shopping. While online shopping was a necessity at the peak of the pandemic, the shift will take a little bit longer, he said.

“I personally believe a lot of people will revert to shopping offline. They may check out the products online for sure because they're used to seeing them online. Of the total merchandise spending in the country, less than 4 percent is online,” he said.

RedSeer’s festive season sentiment survey was seen to be positive for electronics, with 42 percent saying they would like to upgrade their products, and 38 percent of respondents wanting an additional product.

Prabhu Ram, head of Industry Intelligence Group at Cybermedia Research, told Moneycontrol that consumer sentiment is upbeat and optimistic.

“Despite the prevailing macroeconomic environment, value-for-money buyers will seek to score good deals on electronics. Premium segment buyers continue to be immune to recessionary trends and will seek to splurge on the latest and the best,” he said.

Smartphones above Rs 7,000 — value-for-money as well as premium — may see healthy potential sales, he said.

“On the other hand, entry-level affordable smartphones will continue to face the brunt with limited festive sales, as consumers in this segment are affected by changing economic conditions,” he said.

While RedSeer’s festival-season sentiment survey also showed bullish sentiments in fashion, not everyone holds that view.

Singhal of Technopak said that the resumption of social activity after two can spur people to walk into stores. “This is going to be the first season after two years where social activities are fully back to normal. Weddings are one of those events. The kind of clothes people ended up buying during the lockdown period would be very different from what you will require for the festivities. It is quite likely that people will prefer to buy for them offline rather than online,” he said.

A report by social community platform LocalCircles said that one in three Indian households will likely spend over Rs 10,000 during this festival season. Moreover, footfalls in stores and markets are expected to rise by 20 percent, while 49 percent of household consumers are keen to make physical purchases.