Amazon, Flipkart combined festive sales hit $3.5 billion ( Rs 26,000 crore ) in just four days !

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India’s biggest e-commerce players by market share, Amazon and Flipkart, have together raked in $3.5 billion (about Rs 26,000 crore) during the first four days of their flagship festive season sales events, multiple brands and industry analysts told ET, with both the online marketplaces on track to meet expectations for the entire seven-day period.

Industry consultants Forrester Research and RedSeer Consulting are pegging cumulative sales by the two e-tailers from October 15 to October 22 at about $4.7 billion on average.

“The first few opening days of festive sales are skewed towards large value purchases and new launches,” Manish Tiwary, vice president of Amazon India, told ET.

Tiwary said this year more than 1,100 new product launches took place on Amazon, with consumer-facing brands such as Samsung, Apple, Xiaomi, OnePlus, Asus, Lenovo, HP, LG, Whirlpool and Bajaj Appliances witnessing their biggest two-day sales.

A spokesperson for Walmart-owned Flipkart said more than half of all electronics goods purchased by consumers on its platform were in the work-from-home segment, with large-screen televisions, laptops, IT accessories and peripherals witnessing an increase of over 1.4x from last year’s levels.

During the six-day event in October 2019, sales at Amazon and Flipkart touched $2.7 billion (about Rs 20,000 crore), a 30% increase from $2.1 billion in 2018, according to RedSeer’s estimates. Forrester Research, on the other hand, pegged the one-week numbers at about $3.6 billion last year.

These estimates usually vary as Amazon and Flipkart do not officially give a break-down of their sales numbers for the limited timeframe.

According to ecommerce companies, top brands and independent analysts, the overall e-commerce industry, too, has grown by 25-30% during the four-day period. The sector is on track to increase sales by 30-36% during the one-week period compared to last year, the early numbers indicate.

The sales surge in the first four days has come despite lower average discounts by brands this year.

The maximum discounts were offered in categories that had seen inventories pile up — — such as high-end smartphones, fashion, and furniture. For categories like televisions and home appliances, the discounts have, however, been much lower due to stock shortages.

Overall, e-commerce sales over the extended 30-day period are expected to grow to $6.5-$7 billion (Rs 48,000 crore to Rs 51,800 crore), according to separate estimates by RedSeer and Forrester Research, which said the numbers would be boosted by new online shoppers. About 75% of festive season sales are recorded in just one week between October 15 and October 21, according to Forrester.

Industry executives said top brands, including Samsung, Apple, LG and Xiaomi, had seen sales increase by 80-100% across smartphones and consumer durables through e-commerce channels in the four days compared to the same period last year.

Samsung, Apple and Xiaomi did not officially respond to ET’s emails seeking comment.

The crucial festive season sale, which begins in October and runs up to Diwali, accounts for 35-40% of annual revenue for most consumer facing companies.

LG saw a 100% growth in business, led by addition of first-time buyers from tier 2 and 3 towns, and increased demand for premium products across categories, said Deepak Taneja, its India head of online business.

Business has doubled during the four-day period, said Avneet Singh Marwah, CEO of SPPL, the maker of online-focused TV brands like Kodak and Thomson.

Marwah added that discounts have been lower this year due to limited stocks a 90-100% increase in TV panel prices globally, which pushed up prices.

Smartphones, the largest category online, witnessed 2.5X business growth at Amazon during the 4-day sale period this year compared to last year, said Tiwary.

Average spending on smartphones has gone up during the sale period, with the market skewed towards e-commerce purchases, said Tarun Pathak, associate director at smartphone industry researcher Counterpoint.

On Snapdeal, the home products category selling kitchen appliances, linen, home décor and LED lights grew 30% over last year, the value-focused e-commerce platform said, overtaking fashion, traditionally the top-performer during the sales period.

Average spending on smartphones has gone up during the sale period, with the market skewed towards e-commerce purchases, said Tarun Pathak, associate director at smartphone industry researcher Counterpoint.

On Snapdeal, the home products category selling kitchen appliances, linen, home décor and LED lights grew 30% over last year, the value-focused e-commerce platform said, overtaking fashion, traditionally the top-performer during the sales period.

Long-tail categories, including home and home furnishings, have improved as people spend more time at home, it said.

“Big ticket, one-time purchases are doing well. A lot of people have also moved back to their hometowns and are buying more products across several categories for their family,” said Satish Meena, senior analyst at Forrester Research, which has forecast $4.7 billion in sales by the end of the first week.

Covid-19 impact: Consumers move more towards digital

In a sense, the Covid-19 pandemic has changed the way we work, shop and communicate with people more than any other disruption (including technological ones) in the recent past. As more people start working from home, they are sticking to basics, stepping outside only to buy essentials and are constantly worried about the risks of getting infected in crowded places like malls and supermarkets.

Some of the key consumer behavior changes, according to a survey by NRF

● 9 in 10 consumers have changed their traditional shopping habits.

● More than 50% of consumers have ordered products online that they would normally purchase at the store

● Nearly 6 in 10 consumers say they are worried about going to the store due to fear of being infected

While some of these changes are no doubt temporary, others will be permanent. As the community moves beyond the survival mode, the digital-adoption momentum is likely to carry forward and become permanent. This inflection point will be primarily shaped by two major shifts in customer behavior – the reluctance to mingle in crowded public places and higher propensity for digital adoption.

A survey by eMarketer revealed that nearly 60%-85% of internet users across China and South-east Asia have avoided crowded public places to mitigate the risk of contracting the virus. While this will certainly come down to in favor of offline, I expect it will not go back to old normal of majority thronging to brick and mortal shopping aisles.

In short, the Covid-19 outbreak and 2020 will mark a tipping point for the adoption of ecommerce and mobile commerce platforms.

The emergence of a new world order in Retail

We believe retail is at an inflection point – and this is the start of a “A New World Order” in terms of how consumers shop and the way the retail industry operates. Retailers will need to be agile in adapting to this zeitgeist, since the prognosis for brands that miss inflection points is not great —cases in point, Kodak and Nokia.

Under this New World Order, retailers across diverse categories cannot rely entirely on their offline presence even after the lockdowns are called off. They will have to inevitably adjust to the new norms of online buying. This will become even more relevant for categories like groceries and personal care where previously the propensity to buy online was low.

The Leaders, Survivors & Laggards in this Retail New World Order

This “New World Order” as we envision it, could force every retailer to embrace omnichannel ecosystem and converge the operations of their online and offline stores. Not doing so, will mean suffering huge loss in revenues. So, who will be the leaders, survivors and laggards in this New World Order?

The leaders would be agile retailers, who upgrade to an omnichannel ecosystem and constantly introduce innovative shopping experiences by analyzing the new buying behavior. They would be closely followed by the survivors – pure-play digital platforms who have their own e-store and are sell on major online marketplace platforms.

The laggards in this race would be the pure-play offline retailers who are still waiting it out with the hopes that old buying habits and the demand will be restored post the lockdown period.

What Retailers will need to rethink in this new scenario

Prior to the Covid-19 epidemic, traditional enterprise retailers were focused on driving growth, and acquiring market share with physical stores as their epicenter. Increasing traffic to their online store was not a major focus and took a backseat compared to driving footfalls to their physical stores. Brands had made peace with the volume of online orders and the reduced margins from online aggregators as long as the orders kept flowing in.

As the consumer behavior changes, retailers will witness an increasing dependency on the online orders. Projecting on some of the behavior and channel mix we are witnessing in markets like China, the volume mix will look something like as depicted in the table below. As dependency on the marketplaces increase (and hence their clout), so will the possible margins being charged by them.

Retailers will have two options. They can continue to fulfil orders via online aggregators and hence lose a higher chunk towards margin and affecting bottom-line. Or they can set up their own brand.com in order to restrict the revenue bleed (not to mention also reaping other long-lasting benefits viz. fostering brand loyalty etc.). Nike pulling back from selling on Amazon to focus more on its direct-to-consumer business being a case in point.

Will this spell the end of Offline Retail?

As much as I claim that the New World Order will be ruled by online buying patterns, we also realize being innovative with different store formats can become a differentiator for brands competing in similar categories.

For instance, an omnichannel retailer can differentiate itself from online aggregators by transforming few of the stores into experience zones to offer an experiential buying experience. We will see more of such strategies being deployed by brands on the lines of omnichannel furniture retailers like Urban Ladder and Pepperfry, but in more diverse sectors.

In these times of crisis, retailers are increasingly using physical stores as fulfilment centres to turn inventory over quickly and cut losses. Omnichannel retailers, who innovatively utilize their physical store space will inevitably be the winners of this new world order.

How Retailers can quickly adapt

With continued uncertainty, I predict that brands that are currently the most receptive and agile in adopting these new norms of customer behavior will prevail than those who wait it out. So, what can retailers do to cope with these constantly changing buying patterns and quickly cope with the new world order.

Digitization should become a priority

Retailers with an online presence, must capitalize on the recovery trends by introducing innovative ways of fulfilling orders – be it establishing an Online-to-Offline(O2O) platform or building sophisticated digital logistics and payment reconciliation capabilities to be in the lead in this race to recovery.

Focus on improving the visibility of own e-commerce website

The only way retailers can combat the increasing order volumes and diminishing margins from their online aggregator counterparts would be to focus on improving the visibility of their e-store.

As part of these efforts to improve online visibility at a reduced cost, brands should also capitalize on their existing customer data to drive traffic to their own online website. This involves using robust retail CRM and marketing automation systems to take control of existing customer data.

Brands will need to improvise and capitalize on online personalization efforts to differentiate themselves from their competitors and online aggregators. Personalized engagement will play an important role especially in selling essential category items (groceries, medicines and personal care/wellness items) as consumers seek increased communication and trust about the quality of these products.

Brands can deploy personalized engagement beyond discounts or offers by keeping their consumers posted about their internal developments – be it about the store operations in their nearest neighborhoods or even to just convey words of empathy and care about the current situation. For instance, restaurants can actively communicate about the hygiene steps they’ve taken to increase confidence amongst customers. Personalized engagement platforms can enable brands to also communicate about shifting their operations online and reallocate some of the store credits that can be redeemed online.

To sum it up, we all knew the world was turning digital. A new order was being established. But for all we know, the pace has suddenly increased exponentially. It is at our doors, knocking down the traditional walls right now, as opposed to by 2030 as we all were expecting. This New Order will require a paradigm shift in strategy from brands. Only the agile ones will survive. Only the ‘Truly Omnichannel’ ones will prosper.

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I’m Nishanth Muraleedharan aka "Nishani" and I know that I have come into this world with a clear purpose and mission: • To help people to have financial freedom & more free time by doing Internet based Businesses. I've been involved with Internet based businesses for over 18+ years now. Some of my inspiration comes from Jeff Bezos, Elon Musk, Mark Zuckerburg, Sergey and Larry Craig