Online, offline retail converge for festive sales4 min read . Updated: 16 Oct 2020, 09:23 PM IST
With offline brands struggling to restart brick-and-mortar stores, e-commerce firms are using this opportunity to onboard brands and bring their entire store inventory online for customers
Bengaluru/New Delhi: As online festive sales begin this week with Flipkart’s Big Billion Days (BBD) and Amazon’s Great Indian Festival, e-commerce firms and offline retailers join hands to offer a unique proposition for shoppers.
With offline brands struggling to restart brick-and-mortar stores, e-commerce firms are using this opportunity to onboard brands and bring their entire store inventory online for customers.
Walmart-owned Flipkart, which kicked off BBD on Friday, has partnered with more than 100 brands and 2000 fashion stores to help them showcase their retail selection to nearby pincodes, in more than 300 cities.
On the first day, Flipkart saw close to 50% of its new customers coming from Tier 3 towns. The surge from these markets can be attributed to its EMI-based ‘affordability’ products, which the e-tailer offered this year, with 1 of every 5 purchases in high-ticket segments like mobiles, furniture, large appliances and electronics driven through an EMI construct.
Amazon India’s ‘Great Indian Festival’ sale starts on 17 October and will offer over 4 crore products from MSMEs, partnering with around 6.5 lakh sellers along with over a lakh local shops and kiranas to serve customers.
India’s consumer confidence recorded its third successive all-time low as household perception of economy and employment prospects worsened, coupled with millions losing their jobs during the pandemic, the Reserve Bank of India (RBI) said in its quarterly consumer confidence survey in September.
Management consultancy Redseer has said that gross merchandise value clocked by e-commerce firms in festive sales touch $7 billion, up from $3.8 billion in 2019. However, basket sizes of online shoppers will be 13% less compared to previous years.
Retailers are banking on the festive season to get back after the covid impact, as 80% of Indian consumers look forward to festive shopping, said Retailers' Association of India (RAI) and LitmusWorld in their 2020 Festive Shopping Index.
“The phase of discovery is very strong online this year," said Kumar Rajagopalan, CEO, RAI. “More and more people are searching and browsing products online in a big way."
As people continue to stay indoors, online shopping has pushed shoppers online.
The RAI report highlighted that a large number of consumers will shop online (75%) and will consider shopping in standalone stores (66%), as opposed to malls, with a 33% dip in shoppers in the latter.
Sandeep Kataria, CEO, Bata India Ltd said that early signs emerging from Durga Puja in the eastern India suggest that people tired of locked up at home are keen to go out to shop.
“The early signs from Kolkata during Puja say that people will step out. A lot of them will come out, but yes, the online commerce will be higher than the previous years," Kataria said in a recent interview.
For consumer brands, the 2-3 months of festive sales usually contribute 25-35% of their annual sales.
While Redseer predicts festive sales this year to bring 50 million new shoppers online, especially from Tier 2 markets, pushing active e-commerce customers in India to 160 million from 138 million previously, India’s e-commerce market is still at just 4% - 6% of the overall retail sector.
Yet some physical retailers are reporting improved sales in their high-street stores.
“Online sales channels did have an initial advantage but we expect the brick and mortar store to see a jump this festive season," said Sundeep Chugh, chief executive officer at retailer Benetton India. In stores, business was back at 65-75% in September compared to the same time last year. It expects to touch 70-80% of last year’s business in October. The company’s online business, which operates through market places, has bounced back to 100% of last year.
Meanwhile, e-tailers this time have deepened their partnerships with offline retailers ahead of the peak festive season. Landmark Group’s various brands, including fashion retailer Max has partnered with both Flipkart and Myntra.
“We expect that right after the festive season peak, e-commerce will contribute to 10% of overall retail in India, post-which it might flatline and settle at a contribution of 6%. Offline retail and ‘window shopping’ is still a big form of entertainment for Tier 2 customers, as full recovery of overall retail in India to pre-covid levels is expected by the first half of 2021," said Mrigank Gutugutia, director, e-commerce, RedSeer Consulting.
“Offline channels haven't been sufficiently leveraged by online players. Reliance Jio entering the space will be the largest omni-channel initiative this year, as they deliver electronics, groceries from their stores. So, what will be the real success of omni-channel in India will be known through Reliance’s experiments," adds Gutgutia.
Manish Tiwary, vice-president, Amazon India said that online shopping will be a mix of both value and occasion-led buying in the festive season. Smartphones, the largest category in terms of gross merchandise value for e-commerce firms, are expected to sell well like preceding years.
The ongoing pandemic will continue to force offline brands to look at online presence, whether through online marketplaces or individual websites.
Fast fashion retailer H&M’s customer base for online shoppers grew by 60%, compared to last year, largely driven by new shoppers online.