Online sales boomed during India's 2019 festive season

09 December 2019 4 min. read
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As the festive season in India draws to a close, analysis from RedSeer Consulting has positioned this year’s festive sale period as the biggest one ever in terms of online retail. The firm reports that total sales for the period amounted to more than Rs. 19,000 crore for the eight key dates of the season.

RedSeer’s analysis comes at a time when overall sales in the retail sector appear to have slowed in growth. Nevertheless, consistent with trends across the globe, the burden of slowing retail has fallen primarily on the brick and mortar retail sector, while online commerce has been booming.

In India, the market for online commerce represents a bigger opportunity than most economies in the globe, given the substantial customer base that is increasingly wired in. The Boston Consulting Group has estimated that India will have as many as 850 million online users by 2025.

Growth in festive sales

Previous analysis from RedSeer revealed that a large chunk of this online user base is yet to engage with online retail, leaving remarkable room for growth. This growth is gradually being realised, as is evident from the firm’s most recent analysis of “e-tailing” numbers from this festive season.

The eight key festive dates across September and October this year yielded online sales on more than Rs. 19,000 crore, which is the largest volume ever, representing growth of 30% since the festive season last year. This is a product of increase in the number of shoppers, as well as a decrease in cancellations.

The number of online shoppers grew 1.4 times since last year, and the authors position the decrease in cancellations as representative of more intent to purchase. A shift in demographics is also apparent within the sales figures, given that the number of shoppers from tier 2 cities has grown in volume.

Smartphones and fashion

The demographic shift is indicative of an overall growth in economic prosperity, liquidity and urbanisation, which is having an impact on a number of sectors in the Indian economy, not least the consumer market. A Bain & Company report from earlier this year predicted that India’s consumer market could reach a value of $6 trillion by 2030.

Nevertheless, poor macro-economic and financial conditions in the Indian economy were not without their manifestations, as the year-on-year growth for the festive season registered a decline. Growth in online festive sales from 2017 to 2018 was a staggering 77%, and a substantial 44% between 2016 and 2017.

There are other areas where growth has slowed to some extent. A combination of high prices and relative market saturation has led to slow growth in smartphone purchases, while an overall spending crunch has driven average selling prices for the whole sector down by just over Rs. 500.

Category-wise GMV

The fashion retail sector, meanwhile, has spiked considerably. Sales in fashion grew by 51% this year, while the long-tail segment performed even better with growth of 76%. According to RedSeer Consulting, growth in these segments can be attributed to a combination of product diversification and an overall increase in consumer base.

Growth in the fashion segment has also been driven by the tier 2 cities to some extent, where an increasingly prosperous user base is looking to spend on apparel/ Women’s fashion is growing at a higher rate than men’s in these regions. Other segments that are growing but to a lesser degree include large appliances and electronics, excluding smartphones.