Slower-than-expected smartphone sales growth, increased offline shopping, a surge in buying of unbranded goods by Tier 2+town consumers and an uptake in lower-value categories restricted online festival season sales growth on e-commerce platforms to 25 percent at Rs 76,000 crore this year compared with the Diwali season of 2021, according to a report by Redseer.
The management consulting firm had earlier projected e-commerce sales of Rs 83,000 crore for the festive season that began on September 23 and ran till October 24 this year.
Although mobile phones continued to contribute the biggest chunk of sales during the season, the category grew only 7 percent year-on-year.
“We saw fewer new smartphone launches this year during the festive season. While the number of shoppers who replaced their smartphones remained strong, the trajectory of new mobile shoppers has come down a bit,” said Ujjwal Chaudhry, a partner at Redseer.
On the other hand, the fashion business grew 32 percent on the back of a large number of Tier 2 and beyond shoppers buying unbranded goods while sales of electronics (excluding mobiles) rose 13 percent.
However, the long tail of e-commerce purchases—categories such as grocery, e-pharmacy, beauty and personal care, and home care—sprang a surprise with an 86 percent jump.
With up to 125 million shoppers placing orders online, the e-commerce shopper base rose 26 percent over last year year-on-year. Interestingly, 64 percent of these shoppers came from Tier 2 and beyond geographies.
“Flipkart continued to lead the festive season sales as it has a more Tier 2 positioning while Amazon is preferred more in metros and Tier 1 cities. Increasingly, we are seeing that the festive season is when Tier 2 is waiting to shop,” said Chaudhry.
While Redseer did not provide a platform-wise share of sales during the entire season, it had said last month that Meesho had topped Amazon in terms of number of orders placed during the first week of the seasonal discount sales. This comes after years of a ding-dong battle between Flipkart and Amazon. This time around, the Walmart-owned Flipkart led the order share with 49 percent, while Meesho came in second with 21 percent in the last week of September, Redseer said.
Chaudhry also noted that the festive season will account for 15-16 percent of the overall e-commerce sales of around $55 billion this year. This might mean that the importance of a festive season spike is on the wane as industry estimates show that the annual bonanza typically constituted 18-20 percent of yearly sales.The gross merchandise value from festival season sales has been growing twice as fast as online retail in India, according to a recent report by Bernstein India. Online festive sales grew 52 percent to $9.3 billion in the 2015-2021 period when the size of the total online retail market in the country was just over $50 billion, the report added.