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Last Updated : Aug 05, 2020 01:03 PM IST | Source: Moneycontrol.com

Amazon, Flipkart to test waters amid COVID with festive sales ahead of Great Indian Festival and Big Billion Days

Analysts expect around 20 million consumers to participate in the sales. E-tailers are counting on the sales to give them a sense of consumers’ purchasing power and high-demand categories while unloading stockpiles of inventory.

If a sleek dishwasher, mop bucket and jogger pants have replaced branded dresses and shoes in your cart, it probably means you’re shopping in the time of Covid.

Beginning August 6, people across India will have the opportunity to pick more of these and other items in festive sales being organised by Amazon and Flipkart. These will be the first such sales being organised by the e-commerce rivals since the outbreak of the Covid pandemic.

While Amazon has announced a two-day event called Prime Day, Flipkart is offering its sale, Big Saving Days, for an extended period of five days.

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Just ahead of the flagship events of the two companies — Flipkart’s Big Billion Days  and Amazon’s Great Indian Festival — these sales are likely to test the waters in terms of consumer purchasing power as well ascertaining which categories are high-selling in the time of Covid.

Last year, during the six days of festive sales in September and October, e-tailers in India collectively clocked a gross merchandise value of $3 billion.

E-commerce sales surge

While the expected GMV has not been disclosed, the e-tailers, who have become a go-to destination for consumers reeling under the impact of the virus outbreak, have already seen sales volumes shooting up as compared to pre-Covid levels.

A Delhi-based businessman, who sells select mobile phones, stabilisers and health supplements on Amazon and Flipkart, told Moneycontrol that his sales had doubled since the Covid outbreak.

According to research firm Redseer, after being hobbled severely in April by the lockdown, the e-tailing sector had recovered strongly by mid-June, with GMV of over 15 percent as compared to January.

Essentials in the spotlight

Interestingly, the sale has not been triggered by the conventional electronics items but by essentials, including groceries and work-from-home products such as laptops, single-item furniture, kitchenware and comfortable fashion.  .

The latest events are also an opportunity for sellers who have stocks piled up and buyers who haven't made enough discretionary purchases in the last four months due to the lockdown.

According to analysts, around 20 million customers across the country are expected to participate in the sales.

“There’s a set of Indians that has not been overly impacted by the lockdown from a financial perspective — people who are getting their salaries and are clear about their future. They are the ones having money, have not spent it in the past four months, and want to spend now,” said Sreedhar Prasad, independent e-commerce analyst.

In 2018, money spent per online buyer stood at Rs 15,908, according to Forrester Research, a US-based technology and market research firm. An online buyer is defined as somebody who has made an online purchase at least once a year.

Loan moratorium factor

The Reserve Bank of India moratorium on repayment of term loans, which was extended till August 31, may influence consumers’ buying decisions.

With the moratorium ending this month, it is likely that consumers who opted for the waiver will have to start paying their EMIs. “Almost 50 percent of customers used that (moratorium on loans). We will have to see how the spending kicks in,” said Satish Meena, senior analyst at Forrester Research.

The traffic is unlikely to touch the numbers reported during the flagship sale events of the two companies — Flipkart’s Big Billion Days and Amazon’s Great Indian Festival. However, the companies are counting on pent-up demand and the needs of consumers, which have been on hold over the last four months.

“It will be a better event than the previous year’s sale because demand is going to be aggregated,” said Meena.

Don’t expect huge discounts

There will not be massive discounting across most categories because of two key reasons — lack of competition from offline stores and the rise in operational costs incurred by sellers owing to the pandemic.

But categories such as fashion will see some aggressive strategies as this is the last big opportunity for e-tailers to sell summer stocks.

According to Meena, mobile phones are likely to continue to contribute majorly to the gross merchandise value (GMV) of the two e-tailers, largely because of their big ticket size. And also because of the need for individual devices for children, for online classes, in a common household.

India's e-commerce penetration as a percentage of overall retail stood at 4.5 percent in June, up from 3 percent in 2019, according to Redseer. Rapid e-commerce recovery as compared to the offline segment has accelerated digitisation of retail and the trend is here to stay.
First Published on Aug 5, 2020 01:03 pm
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