India's top three online retailers -- Flipkart, Snapdeal, Amazon -- buoyed by discount offering on several products at the beginning of the festive sale season are in an upbeat mood with each of them claiming to have bettered their past sales performance. Together, India's ecommerce companies are looking to clock total sales of around Rs 12,000 crore from this sale season.
Although, Flipkart and Snapdeal's sale has one more day (Thursday) to conclude their 5-day sale, it appears so far that the online retailers have bettered sales expectations.
Sales numbers of these online entities would come in later, but one interesting feature has been that the online discounts have seen enthusiastic shoppers from tier II and tier III cities joining the fray to take advantage of deals in this limited period.
Most of the online shoppers from tier II towns such as Sikkim, Tripura, Andaman and Nicobar islands are dominating the shopping landscape.
"It was completely expected that e-commerce as a category would do better than last year. Ecommerce is expected to grow to 35 to 40 percent this year. There are multiple reasons for this expectation -- economically, as a country we are better than one year ago and so there are more incomes wallet which coupled with relatively moderate inflation, there are more people shopping this year than the previous year. Also, the sale coincided with the first day of Navratra festivals which is the beginning of the festive period," said Arvind Singhal, Chairman and Managing Director of Technopak Advisors, Delhi-based consulting management firm.
He says that with regard to sales claimed by the ecommerce firms, it cannot be validated as they do not publish any further data. However, Singhal says that 'very good' sales are expected not in the four or five day of the sale but until end of the year. "The wedding season will begin soon and that will mean high value purchases of consumer durables. Overall consumer spends will be high," he says.
Online discount wars
Flipkart and Amazon snipe at each other's heels as the discount wars go on. A day after Flipkart said that the company had recorded its highest-ever single day sales on Monday and sold products worth Rs 1,400 crore, its nearest arch rival Amazon pronounced that its overall business grew three-fold over last year.
Amazon India said sales from from tier II and tier III towns jumped 17 times over last year, according to a Times of India report. "We have seen a five-fold growth in new customer acquisition and 70 percent of them came from tier II & II towns," the ToI report said quoting Manish Tiwary, VP, category management at Amazon India.
According to a Times of India report, the US online retail giant's Indian arm registered orders of around 1.5 crore units during the sale season, which could translate into sales of around Rs 3,000-3,500 crore of gross sales.
The Bengaluru-headquartered Flipkart, has claimed that it has bettered its sales performance by 25 percent this year, while setting a consolidated target of Rs 4,500-5,000 crore in gross sales during the sale season, the ToI report said.
Snapdeal, too, claimed that nearly 11 lakh buyers from over 2,800 cities and towns across India bought products on its marketplace in the first 16 hours of its sale, though trailing the two e-commerce giants. "Snapdeal during the last four days of the sale event over achieved its internal sales targets and has already touched Rs 500-600 crore in GMV," a Mint report said.
DIPP rules no dampener
The Department of Industrial Policy and Promotion (DIPP) rules announced in April prohibit marketplaces from offering discounts and cap total sales originating from a group company or one vendor at 25 percent. The guidelines also state that marketplaces cannot influence pricing. As per the new government rule, e-commerce entities with marketplace model shouldn't directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.
As a result, there were concerns that online players failing to offer any discounts on their products could prompt customers to hold back spending. But ahead of the start of the sale season, ecommerce players wooed vendors with special incentives on providing discounts on goods sold by them.
Meanwhile, the All India Online Vendors Association (AIOVA) have sent a letter to Union Minister for Commerce and Industry Nirmala Sitharaman requesting her Ministry to `investigate' the violations of FDI rules by e-commerce marketplaces. "Our current concern is regarding the ongoing festive sales, where we had previously informed you that major sales are going to happen by sister companies of the marketplace,", the letter states urging the Ministry to seek details of sales of Amazon Internet Pvt Ltd and Flipkart Internet Pvt Ltd.
DIPP rules aside, consumers have gone all-out to avail of the scorching pace of discount offers on various products , helping the online retail entities log record sales.