By any estimate, 2017 recorded India’s biggest online festive season sales by a fair margin. While RedSeer Consulting put the growth at 50% over the 2016 sales numbers, Forrester Research’s estimates were a tad lower, but still at a healthy 40%.
According to research and advisory firm RedSeer, between 20 September and 20 October, 2017, e-commerce majors were “on track” to clock record sales of $3.3 billion (Rs 20,000 crore). “This would be 50% higher than the 2016 festive month, which generated $2.2 billion in sales,” RedSeer noted.
In the five-day period, starting 20 September, which marked the first mega sale event, the industry generated Rs 9,000 crore ($1.5 billion) in sales, while the second event, between and 4 and 8 October, saw the companies sale good worth $500-600 million. The third and final event, during 14-17 October, was expected to clock $700-900 million.
However, Satish Meena, senior forecast analyst, Forrester Research, told VCCircle that online retailers have sold goods worth $2.8-2.9 billion this festive season, as compared to $2-2.1 billion last year.
“We expected 55-60% growth, but the pre-GST purchases in June and the lack of consumer sentiment towards spending during this festive season, led to slower growth. However, this is still a very healthy growth rate if you compare it with the first six months of 2017,” Meena added.
The growth in rising sales numbers have also triggered a battle for supremacy between arch rivals and market leaders Flipkart and Amazon. Both the homgrown e-commerce major and the global behemoth is staking their claims to the top spot.
A RedSeer report, however, had said that this year the gap between the top two players had widened with Flipkart emerging as the clear leader. In 2016, the consulting firm had said that Flipkart and Amazon were in a neck-to-neck fight.
“We do not have market share data by company, but Amazon and Flipkart have accounted for almost 80% of total sales, leaving very little for other players,” Forrester’s Meena said.
Whichever way it goes, the consumer seems to have had a gala time in 2017.
After the first mega event of the season ended, RedSeer had claimed that Flipkart dominated the market and the Softbank-funded e-commerce firm saw its gross merchandise value market share increase to 58% from 50% in 2016.
“This year pretty much has been the year of Flipkart. They have taken away the market share not just from their biggest competitor (Amazon), but also from the whole industry. Flipkart really dominated the five-day sales this year,” Mrigank Gutgutia, engagement manager at RedSeer had told VCCircle.
Also, Flipkart, in a separate statement, had then said that its market share during the festive sale period was over 70% of the e-commerce segment in India.
When asked on the overall performance of Flipkart during the festive month, Smrithi Ravichandran, senior director, business development, Flipkart, said: “We have had a phenomenal sales this festive season. Flipkart stood out as the winner of the festive season sale on the back of some great consumer finance programmes. We saw a large amount of sales being driven all through the festive season by our innovative affordability constructs such as no-cost EMIs, buy-now-pay-later and product exchanges.”
Smartphones, fashion, large appliances and consumer electronics continued to remain the top categories on Flipkart. “Flipkart now commands a 70% market share in the online smartphones market. In fashion, together with Jabong and Myntra, we hold 80% of the entire online market for fashion. In the large appliances category which includes TVs, refrigerators and washing machines, Flipkart commands 60-65% market share,” Ravichandran added.
While not commenting on the total GMV it achieved during this season, she said that the homegrown company had garnered a disproportionate market share across all parameters, making everyone else irrelevant.
“The trends were consistent with the observations of other independent research and surveys, which have also said Flipkart was the unquestionable leader this festive season.”
According to an industry expert, Flipkart had an edge over all companies during this festive season because of their strong hold in the smartphone and fashion categories.
Last month, the Redseer report claimed that Amazon’s share had dipped to 26% during the season as compared to 32% recorded in 2016.
However, Manish Tiwary, vice-president of category management at Amazon India, said: “There are no credible, recognised research reports at present in India with robust methodology and significant sample size to provide objective market share reports. We have noticed poorly informed speculative reports with irrelevant sample sizes. The numbers do not add up to what we are seeing in the industry.”
“What we can say based on our data is that we remain the largest marketplace in India and the fastest growing,” Tiwary added.
Now that the festive month is over, Amazon has maintained its stance that it was the “undisputed leader” in the Indian e-commerce industry.
The US-based global player also quoted an IMRB study, wherein it was stated that Amazon.in had more transacting customers than any other online destination. The study also showed that the global giant had the highest number of customers as well as the maximum number of orders placed this festive season.
“We are humbled by the tremendous response from customers making Amazon.in the undisputed leader in the e-commerce industry with most number of transacting customers and order share. More customers shopped on Amazon.in than anywhere else with orders received from 99.7% of India’s pin codes,” said Amit Agarwal, senior vice-president and country head, Amazon India.
“Customers shopped across mobile phones, TVs, large appliances, home décor, furniture, sports equipment and everyday essentials, making the Great Indian Festival the biggest shopping event for Amazon.in in history,” he added.
The company claimed that the event accounted for the biggest sale of smartphones in 2017, and Prime continued to be a bestseller with membership doubling since July 2017.
While e-commerce behemoths Flipkart and Amazon were battling it out for the top spot during this festive season sale, Snapdeal, which looked out of place of late, has claimed that it has achieved profitability during the one-month sale period.
The company, which grabbed the third spot during the 2016 festive season sales, claimed that it has managed to not only increase sales, but has made positive net margin in the entire sales season.
“Snapdeal’s net margin for the current festive season grew six-fold compared to the festive season last year, converting a traditionally loss-making season to a profitable one,” Snapdeal said in a statement. However, it did not reveal the GMV numbers and its estimated market share.
Net margin is the money that the platform makes as sales commission after deducting the costs of fulfilling the order, including logistics costs.
“The ability to generate positive returns in times of hyper competition and aggressive discounting comes from a well-defined strategy that focuses on building depth in select categories and steadily increasing the efficiency of operations by optimising all operational processes,” the company added.
Snapdeal chose the festive season to curate the best deals on products that its core audience buys often, including merchandise like sarees, watches, footwear, kitchen tools and utensils, electronic accessories, personal care and value packs, among others.
“Diwali 2017 is perhaps the first time that any e-commerce company of scale has reported profits. As the festive season sales start winding down, the direction that Snapdeal has chosen for itself is becoming clear,” it said.
Alibaba-backed Paytm Mall was, in fact, expected to be the biggest gainer in terms of market share in its first-ever festive season sale.
Based on the first day’s response, Paytm Mall was targeting $0.5 billion in festive season sales. However, it did not disclose specific numbers for day one.
Paytm Mall, which is yet to disclose figures for the 2017 festive month sale, had told VCCircle that the company was expecting a cumulative GMV of around $4 billion by this year end.
“Paytm Mall’s traffic surged 30% this festive season, with maximum sales in the appliances, mobiles and consumer goods categories,” Paytm Mall COO Amit Sinha had told VCCircle, adding that 60-70% business came from non-metro cities.
While in a separate statement, Paytm said that over $1.6 billion worth of payments were processed on its platform during this festive season.