E-tailers eye a $6-billion sales bonanza this Diwali season

Indian consumers could this Diwali season spend at least $6 billion (Rs 39,000 crore), thrice as much as last year, on buying clothes and gifts online. This is in line with the new trend of spending a larger proportion of shopping budgets online than offline at neighbourhood stores and malls across the country.

Nearly 40 per cent of consumer spending on buying clothes and goods in India takes place between September and December, the festival season that includes Dussehra and Diwali. "Our estimate is that e-commerce in India this Diwali should be 2.5 to three times as much as last year," Nitin Bawankule, director of e-commerce at Google India, told Business Standard. "Of the industry's $4.5 billion worth of transactions last year, close to $2-billion sales took place in that three-and-a-half-month period (September to December)."

The spurt in online sales during the festival season is expected in spite of the broader economic uncertainty after a weak monsoon and drought-like conditions in a third of India's crop-growing regions dampening consumer sentiment.

"The class that is buying (goods online) is clearly not the one severely affected by macroeconomic factors. Their salaries and incomes have not come down. They are not affected by a drought, either," said Bawankule. "So, the people who can afford to buy online and have access to do so will buy. And, they might shift a lot more of their shopping budget from offline to online."

By December, India will have 60 million users buying goods online, 50 per cent more than at the beginning of this calendar year, mainly due to a higher smartphone penetration, improved internet bandwidth and an increasing number of stores' online presence. Additionally, decision-making on purchase of goods online is increasingly shifting towards the young - the 15-25-year-olds who are comfortable using smartphones and transacting online.

Google estimated the total gross merchandise value (GMV) of Indian e-commerce transactions to touch over $10 billion in the year to December 2015, more than twice the $4.5 billion in 2014, Bawankule added. "Among the top three players - Flipkart, Amazon and Snapdeal - it will be more than $8 billion this calendar year."

The success of several festival-focused online shopping events last year by Amazon, Flipkart, Snapdeal and Google is likely to be replicated on a bigger scale this year. Google is working with consumer product firms like Unilever to take samples of their products to millions of consumers across India and prod them to buy online. Google aims to get over 20 million small and medium businesses online by 2018 through its 'mybusiness' initiative.

Google expects India's online shopper base to increase to over 200 million by 2020.

"The Indian middle class is estimated to have 250 million people of the current population of 1.2 billion. That entire middle class will have experienced online shopping in the next three to five years. If not every person from the middle class, at least every family will have shopped online at least once a year," said Bawankule.

ONLINE FIREWORKS

• 60 mn online shoppers expected by December
   
• 40% of total consumer spending on purchase of clothes and other goods in India takes place between September and December
   
• $10 bn total estimated GMV of Indian e-commerce transactions by December 2015
   
• $8 bn likely GMV transactions among Flipkart, Amazon and Snapdeal alone
   
• 200 mn online Indian shoppers likely by 2020