Safety factor swells the carts of e-commerce firms this festive season

Convenience and comfort of ordering from homes apart from discounts pushing people to choose e-commerce over offline

If you visit the Amazon website to buy a 64 GB iPhone 11, you’ll get it for Rs 49,999 with an exchange offer of up to Rs 11,000. The same phone is available at Rs 48,900 after cashback at a Croma store with the best price after exchange dropping to Rs 45,900.

Industry experts point out that discounts are coming down on e-commerce platforms compared with previous years with deep ones only on certain items. Still, ecommerce is expected to do robust sales of $7 billion in gross merchandise value (GMV) compared to $3.8 billion during the same period in 2019, according to a RedSeer estimate.

Hence, it is not only this price difference that is pushing people to choose e-commerce over offline stores this festive season, say analysts. The pandemic has disrupted how people buy products and services and how they perceive ecommerce.

“Customers are purchasing online because of the comfort, safety and convenience, not only discounts,” said Satish Meena, senior forecast analyst at Forrester.

A Forrester report points out online spend will increase 34 per cent yoy with e-retailers expected to generate about $6.5 billion in sales during this year’s festive month (October 15 to November 15), with around 55–60 million online buyers participating. 

“Since people have now got a taste of how convenient e-commerce shopping is and how much time and effort it can save, it will have a spillover effect on the forthcoming seasons too,” said communications strategy consultant Karthik Srinivasan.

The standardised lockdown rules and the growing hesitation among consumers to go outside and shop have also moved people towards e-commerce, said Somdutta Singh, founder and chief executive officer, Assiduus Global, an e-tail management company. “A clear example of this is how Amazon Prime Day went off without a hitch. Sales hit $10.4 billion, up from $7.16 billion in 2019 and from $4.19 billion in 2018,” she said.

Flipkart says e-commerce sales are far ahead of only discounts. “If a person sitting in Indore wants to buy a Zara dress or a certain makeup item or a person in Gangtok wants a book to prepare for the civil services exam, he/she won’t get access to it through a retail store. E-commerce has been able to drive this access to selection and parity,” said a company spokesperson. 

E-commerce is also seeing its cart swell in terms of variety. A customer who used to shop only for apparel and electronics items on e-commerce websites earlier is now also looking at groceries and household items to buy.

The apparel segment, which offers up to an 80 per cent discount online, is seeing a 30-35 per cent price reduction offline. The thumb rule in men’s wear is to offer around 35 per cent discounts on 20 per cent of products. Most retailers are sticking to that. In women’s wear, around 30 per cent of the products are sold at a discount of 35 per cent. Retailers are sticking to that, too. “Most brands also have their digital channels or store fronts where discounting is high. One reason for this is that discounts are a key lever for apparel retailers online in the absence of trial facilities. But offline there are no such issues. So discounting is not as high,” says Jaydeep Shetty, retail entrepreneur and fashion professional.

V-Mart, one of the country’s largest value chain retailers, is also sticking to low discounts this year as customers are coming into the stores pre-decided regarding what they want to buy. “There is no window-shopping this year and buyers are serious; so there is no need to lure them with discounts. This is across categories,” said Anand Agarwal, chief financial officer, V-Mart.

Offline is also seeing a rollback of discounts, especially in durables. There is a shortage of products because of the ban on Chinese goods and steep import tariffs because of which demand is more than supply and product prices have increased. 

“Prices of durable and electronic products have hardened due to the supply-side shortage. Whatever discounts are visible are being pushed mostly by banks. Whether it is higher cashbacks (on use of credit cards) or pushing consumers to buy on equated monthly instalments (EMIs), it is the banks that are aggressive this year,” said Ritesh Ghosal, chief marketing officer, Croma, Infiniti Retail Ltd.

B2B wholesale platform Metro Cash & Carry has also seen an uptick in sales for consumer durables in the last one month. Compared to the festive season last year, it is growing by 11 per cent in home and kitchen appliances. People are still not dining out and there is higher home food consumption along with preference of home entertainment. Hence, the Bengaluru-based company is witnessing a surge in demand for microwave ovens, refrigerators and large sized LED panels.

Total online festive month sales: $6.5 bn

Growth rate: 34% YoY

Category-wise break-up

Smartphones: 34%

COnsumer durables: 17%

Fashion: 16%

Appliances: 14%

Homeware & furniture: 6%

Grocery: 6%

Source: Forrester Research