Amazon, Flipkart festive sales are off to a good start

Ecommerce platforms Flipkart and Amazon India
last week set the stage for an intense battle in the festive period, with
back-to-back changes in sale dates, signalling a clear unwillingness to concede ground.

The much-hyped flagship sale events of both Walmart-backed Flipkart and Amazon India are said to have started well, based on early trends Sunday as well as during the early access for subscribers of customer loyalty programmes like Amazon Prime.

A senior industry executive aware of Flipkart’s sales trends said the platform had seen “better than estimated” sales during the initial hours of the first day of the flagship Diwali sale.

Both the e-tailers started their flagship sales – Big Billion Days (Flipkart) and Great Indian Festival (Amazon) – on a Sunday when consumers typically spend more time on these platforms.

Flipkart has meanwhile also expanded its grocery business quickly before the flagship event, taking on rival Amazon India which has been focusing on e-groceries for a while now.

Flipkart’s grocery delivery services are now available in around 600 cities compared to around 100 earlier.

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“They (Flipkart) have taken the grocery business to around 550-600 cities. By the end of December, it would be in more than 1,000 cities,” a person aware of the matter said. “Some of the expansion in non-metro markets would be through partnerships and the final number of cities they reach for e-grocery would depend on that, but clearly they have gone aggressive on it.”

A Flipkart spokesperson declined to comment on the expansion of the grocery vertical.

According to a report by market research firm Forrester Research, grocery will emerge as the fastest-growing category, as most of the festive-themed categories within grocery move online, aided by an increase in basket sizes during this period.

Interestingly, Flipkart’s rapid grocery expansion not only increases competition between platforms like BigBasket, Grofers and Reliance Industries’ JioMart, but also social commerce startups such as Meesho and DealShare, which are targeting the non-metro markets with their e-grocery offerings.

After a
$3.6 billion fundraise by Walmart-owned Flipkart in July, ET reported that a
‘disproportionate chunk’ of the new capital would be allocated towards expansion of the grocery vertical.

Online grocery has emerged as one of the largest beneficiaries in ecommerce due to the Covid-19 pandemic as more consumers moved online to order essentials and groceries.

A senior industry analyst who is tracking the festive season sales said the Flipkart Group, including its fashion portal Myntra, is expected to clock gross sales of $4-$4.5 billion during the festive month, while the same for Amazon India would be around $4 billion.

These are estimates and could change based on the actual sales.

Forrester has said that the
e-tailers could clock a record $9.2 billion in gross sales during the festive month starting October 3 and that 70% of it would happen in the next one week.

According to Vishwas Patel, director of Infibeam Avenues, which operates payment gateway CCAvenue, the first day of the festive sales on Saturday saw a spike in digital payment modes, with a majority of transactions processed on credit cards and the Unified Payments Interface (UPI).

While UPI dominated small-ticket payments, credit card-based transactions were majorly used for large-ticket items driven also by lucrative discount deals being offered by banks, he said.

“We’re seeing that banks want to make up for lost time especially by offering financing alternatives for customers,” said Patel. “UPI is obviously a popular choice among customers owing to the ease of checkout, but low-cost financing modes such as credit cards and Buy Now Pay Later have emerged strongly over the last few months, and this trend was reflected yesterday as well.”

Flipkart said its pay later facility was one of the most used offerings for segments like grocery, lifestyle and home.

“Early data for Day 1 indicates a strong start across categories for the month-long festive season and we are excited by the momentum and the opportunity to serve customers and enable sellers to bounce back…,” Amazon India said, adding that Prime subscription continued to be a top attraction for its consumers. Two of three Prime sign-ups were from tier 2 and tier 3 cities, it said.

According to a banker at a leading private sector lender, lucrative offers on credit cards between banks are not only an incentive to spend but also a customer acquisition strategy between banks that vie for customers through co-branded cards.

For instance, ICICI Bank has a co-branded partnership with ICICI Bank, while Axis Bank-Flipkart credit card customers have special discounts on the e-commerce platform.

“The festive season also presents opportunities for banks to increase visibility of their cards, and as an acquisition strategy it is very effective as costs of onboarding are very low, and the spends on these cards are recurring and high,” the banker added.

On overall sales, Flipkart said in a statement on Sunday that the early access for Flipkart Plus customers saw a 40% growth compared to last year, and that 45% of customer demand has been from tier 3 cities and beyond, reflecting the broader trend of strong demand for these segments from this market.

Flipkart said pent-up demand for large appliances and electronics led to TVs and laptops, respectively, emerging as the top drivers of sales in these categories.

Amazon added that it saw a 60% increase in sellers who received their highest-ever single day sales year-on-year on the India marketplace.

The number of sellers receiving an order from tier 2 and tier 3 cities jumped by 21% and 16%, respectively, it added.

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