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Online fireworks await consumers this festive season

This year’s festive season promises to be different—a lot of the spending in the season will be driven by India’s well-funded and aggressive online retailers who are lining up eye-popping discounts, cash-back schemes, and exclusive merchandise. Photo by iStock Photo; imaging by Yatish Asthana/MintPremium
This year’s festive season promises to be different—a lot of the spending in the season will be driven by India’s well-funded and aggressive online retailers who are lining up eye-popping discounts, cash-back schemes, and exclusive merchandise. Photo by iStock Photo; imaging by Yatish Asthana/Mint

India's fabled festive season, which starts in September and winds its way through to mid-January, could well be the tipping point for online retailers

New Delhi/Bangalore: It starts in Kerala (and just about anywhere you can find Malayalis) with Onam, the Malayali harvest festival, in early September, then winds its way through Dussehra, and peaks during Diwali, Christmas, and New Year’s Day. It winds down with Pongal and Sankranti in south India.

It is India’s fabled festive season—the period between September and mid-January when sales of everything from apparel and air tickets to consumer electronics, household appliances, cars and bikes soar.

Sales in the festive season are usually a good measure of how the economy is doing. In 2012-13 and 2013-14, the festive season was tepid. Corporate performance was down, inflation was high, consumer- and investor-sentiment were both depressed, and the government of the day (a Congress-led United Progressive Alliance—UPA—one) was lurching from one crisis to another. Both years saw the economy expand by less than 5%.

This year’s festive season, which is just about getting ready to kick off, promises to be better. A new government, a Bharatiya Janata Party-led (BJP-led) National Democratic Alliance (NDA), is in power, consumer- and investor-sentiment are both buoyant, and corporate earnings are growing again.

Yet, this year’s festive season also promises to be different—a lot of the spending in the season will be driven by India’s well-funded and aggressive online retailers who are lining up eye-popping discounts, cash-back schemes, and exclusive merchandise.

Flush with money from recent fund-raising efforts, India’s e-commerce companies are pulling out all stops this festive season to woo shoppers in a period that is crucial for them to justify, and possibly increase, their soaring valuations.

Flipkart, India’s biggest online retailer, said in July it had received as much as $1 billion in fresh capital, the largest-ever fund-raising by an Indian start-up and among the largest-ever by any Internet start-up globally. The company is currently valued at $7 billion (including the $1 billion in cash), according to analysts. is in talks to raise another large round of funding merely three months after it raised $233.77 million earlier this year, Mint reported in August. The latest round, whenever it is complete, will value Snapdeal at a significantly higher number than the $1 billion valuation it received earlier this year, analysts say.

The performance of these companies during the festive season will justify these valuation; e-commerce sites typically see sales doubling in this period.

‘Biggest Diwali ever’

Planning for Diwali sales—the high point of the festive season in India—has been on for a few months and the discounts and offers will start by the end of September and culminate with Google Inc.’s online shopping festival in December, according to executives at several e-commerce companies.

According to these people, Flipkart, Myntra (owned by Flipkart now), Snapdeal and Amazon will likely be the most aggressive. Discounts as high as 80% could be on offer, they add, pointing to Amazon’s India entry as another factor that will push local e-commerce companies to do more this festive season.

Analysts are predicting a better festive season for most companies than last year’s; a new and more business-friendly government is in place, the stock markets are at an all-time high, business and consumer confidence have improved since last year, and the economy expanded 5.7% in the first three months of this fiscal year—the fastest in two-and-a-half years.

“This is going to be the biggest Diwali ever," says Sandeep Komaravelly, senior vice-president, marketing, Snapdeal, an e-commerce marketplace run by Jasper Infotech Pvt. Ltd. The company is working with brands and sellers to come up with attractive offers, the details of which will be disclosed by the end of September, Komaravelly added. “Whatever offers are in the offline stores, you will find better ones in the online channel," he added.

Snapdeal is expecting orders to grow 45-50% in the Diwali month. Diwali is in October this year.

Online retailers have already started generating hype about Diwali offers, so much so that many shoppers are postponing buying things until the festive season in the expectation of better deals.

Suruchi Singh, a housewife and mother of two, has put her shopping on hold as she waits for festive season deals to start. She is looking to buy a microwave oven and furniture for her house. “I will shop depending on where (offline or online stores) I get better offers and deals," she says.

Going the extra mile

Online retailers are thriving because of people like her and 21-year-old Shivangi Kapoor, who typify the average Indian shopper.

Kapoor does most her shopping online. This festive season, she is even helping her mother pick Diwali gifts on Indian e-commerce portals. “Sites like Jabong are already offering massive discounts. I go for online shopping only because of discounts," said Kapoor.

E-commerce websites are going an extra mile to convince consumers to buy each and everything online.

India’s largest e-commerce firm, Flipkart India Pvt. Ltd, could offer steep discounts and freebies, bundle products, and forge alliances with large banks for additional cash-back offers and discounts across the website, according to two people close to the development who asked not to be identified.

Flipkart hopes to touch an annualized gross merchandise value (GMV) of $2 billion this festive season itself, the two people added. This means the site will be hoping to achieve a GMV of nearly $170 million in October; Diwali falls on 23 October this year. Flipkart achieved a GMV of $83 million this February, according to the company. GMV refers to the value of goods sold on a site, and doesn’t include discounts or returns.

Flipkart declined comment on its plans for the festival season.

Paytm, a payment solutions provider which recently launched an e-commerce marketplace, will offer traditional Indian sweets, chocolates, and even dry fruits. The company has signed up over 20 merchants for this.

“The new category is part of a slew of initiatives to make our mobile marketplace the go-to destination for all shopping needs. Given the festive season which is round the corner, we expect significant traction in this category in the coming days," said Vijay Shekhar Sharma, chief executive at Paytm.

E-commerce companies have an advantage over offline retailers, because of their massive war chests, said Rachna Nath, an executive director at audit and consulting firm PricewaterhouseCoopers.

Since January 2012, venture capital and private equity investors, both local and foreign, have ploughed more than $3 billion into Indian e-commerce firms, according VCCEdge and Mint Research. Out of this, more than $2 billion has been invested so far in 2014.

Bracing for a spike in sales

Online fashion retailer Jabong, owned by Rocket Internet, is targeting 150,000 orders a day during the festive season.

“Every year, the festive season sees a huge spike in orders and the festivities reach a crescendo on Dhanteras, Diwali," said Praveen Sinha, co-founder and chief executive at “We are expecting close to three to four times the usual order volumes during the festive season. Our operations department has already started ramping up capacity. Our various packaging centres, delivery partners and customer care centres are in the process of increasing manpower by about 200-300%. Forecasts are also being sent to our marketplace vendors to ensure they are better prepared for the increased volumes."

Furnishing and home decor products also attract a lot of consumer interest during the Indian festive season and the sellers of these products such as Fabfurnish are spending heavily on television ads and online marketing to promote their deals and offers.

“The festive season, followed by the wedding season, is the most important time for home store and furnishing companies. We will offer the best of discounts...better than what we would have offered till date," said Neelesh Rangwani, marketing head,, adding that the company expects sales to go up by 50-80% month on month during the festive season.

The company has increased marketing spending by nearly 100% for the months of August and September, he said without disclosing the actual amount spent on online and television ad campaigns.

Exclusive merchandise

Promotions and discounts aren’t the only carrots being dangled by e-commerce firms.

Jabong will launch ethnic collection of Indian designer brands from W, Biba and Sangria to apparel from designer Rohit Bal and others, as well as exclusive international brands such as Mango, River Island and Miss Selfridge, among others.

Jabong’s rival Myntra will launch three of its private label brands during Diwali and also introduce three international brands that will be available exclusively on the site by the end of September.

“Myntra is preparing to entice consumers with unique international brand launches, thousands of unique products which won’t be available anywhere else for the coming festive season," said Ganesh Subramanian, chief operating officer at Myntra. Subramanian declined to comment on whether the site will increase its discounts or promotions.

Another online marketplace,, too, will unveil exclusive partnerships and discounts of up to 75% for apparel and 30% for electronics, according to Radhika Aggarwal, co-founder and chief marketing officer at Shopclues. The site receives 60,000 orders a day on good days and sees this increasing by 40-50% during the Diwali month, she added.

Beneficial spin-off

Apart from shoppers, the other big gainers from the spending by online retailers are e-commerce enablers—as logistics firms, advertising platforms and mobile payment technology companies, which provide essential services to online retailers. These e-commerce enablers are expecting a windfall from the spike in higher spending by online retailers during Diwali.

“We have been on it since June. We are building more capacity as we expect orders to shoot up anywhere between 50-60%," said T.A. Krishnan, founder and chief executive of logistics provider Ecom Express Pvt. Ltd.

Cashkaro, a cash-back and couponing website, expects a 50-75% jump in traffic and transactions this festive season.

“We are seeing some of the best-ever offers this festive season," said Swati Bhargava, co-founder “Competition has intensified, companies have raised more money and capturing the audience who is shopping online is now on top of everyone’s mind."

Cashkaro is already being approached by e-commerce retailers to book slots on its homepage for promotions. “Companies have got special budgets for festive season and are booking more advertising spaces for all of October and November," she said.

Banks, too, are gearing up for what could be the biggest ever online festival sale in the country. Citibank N.A.’s Indian unit is in talks with top e-commerce firms to come up with additional discounts and offers.

The bank did not disclose any specifics, but said it would roll out the offers by the end of September.

According to Muge Yuzuak, head of cards and personal loans, Citibank India, “The proportion of online sales on credit cards as a percentage of total sales has gone up 50% in 2014, and in recent months, online shopping has become a key driver of credit card sales."

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