Exactly a month after the first mega online sale of the year, e-commerce companies seem to be clearing the decks for more, given that it may actually be paying off. According to a report by research firm RedSeer Consulting, last year’s sale days – which roughly totalled 30 – contributed a massive 30% to the annual GMV.
Indicating that the Indian e-tailing industry may be massively sale-driven, the report stated that there has been an increase of about 30% in the average order value and 200% in the number of daily transactions during the sales period in 2017.
Although it is commonly accepted that sale days – which add up to just 10% of the year – work because it inducts new customers on to the platform and help shape the habit of online shopping, the RedSeer study brings to light two critical insights – the role that geography and smartphone purchases might be playing in this.
Dialling it up
Smartphones – a high-value category – has reportedly been the biggest segment in terms of GMV in 2017 with nearly 50% increase from the previous year, followed by electronics and fashion. This could be attributed to flash sales, lucrative exchange offers and most importantly, exclusive e-commerce partnerships.
In fact, according to analysts at Counterpoint Research, nearly 100 smartphones were exclusively launched online last year, pushing sales for both Flipkart and Amazon India, although the former might have taken a lead in this space.
As per the report, Amazon – which started exclusive deals only in April 2017 with Redmi 4A – had to play catch-up with Flipkart which launched Redmi Note 4 in January the same year. Amazon may have the upper hand in the premium smartphone category (above Rs 30,000), but ‘Flipkart had 64 exclusives, with 158 phone models launched on the platform in 2017.’
In fact, as per research analysts, Flipkart now sells more than half the smartphones online overall, taking a crucial lead over its top rival in this category.
In a good spot
The RedSeer report quoted earlier in the story expounds on how Tier II+ cities have emerged as the fastest growing market in the e-tailing industry today. In fact, 10 million shoppers from Tier II+ cities were added into this fold in 2017, with over 50 million expected to join in this year.
The e-tailing industry reportedly witnessed a 33% increase in the number of monthly active shoppers in 2017 – primarily credited to increased penetration in non-metro cities. According to the above report, players in this space are bullish on Tier II+ cities and firmly believe that this geography would bring in the next phase of growth.
Speaking to ET on the sidelines of the Republic Day sales last month, VP of category management at Amazon India Manish Tiwary had said that the company had “acquired the highest number of new customers ever in one single event, outside of Diwali sales, with 85% of the new customers coming in from tier II+ towns.”
In fact, according to RedSeer, the number of online shoppers in India is expected to grow at a CAGR of 27%, with more than half from T1 and T2+ cities by 2020.
2018 sales – thus far
With only one mega sale out of the way as of now and both players claiming victory over the other, one can only conjecture. While Amazon has said that it registered twice the number of orders than its closest rival in the e-commerce space in India, Flipkart has maintained that it leads with over 60% marketshare.
With talks of Walmart buying a considerable share of Flipkart’s business doing the rounds and Amazon beefing up its hyperlocal grocery delivery segment in India, the fight between the two will inevitably spill on to newer territories.
Source : https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/shopping-deals-why-online-sales-work-for-flipkart-amazon-despite-massive-cash-burn/articleshow/63105700.cms