India’s festival shopping season is underway, pitting the largest online retailers in the country against each other in a fight to seize a greater portion of the booming eCommerce market.
With their own shopping events Big Billion Days and the Great Indian Festival, the two largest companies, Walmart-owned Flipkart and US-based Amazon, are head-to-head. Deep-pocketed JioMart, owned by the richest billionaire in Asia Mukesh Ambani, is also aiming for market share.
Crucial season
Satish Meena, senior forecast analyst with market research firm Forrester, said that the sales blitz leading up to Diwali, the festival of lights, is crucial for companies because “they get a big chunk of spending during this time.”
But this year is especially important as the world is reeling from the economic fallout caused by the pandemic of the coronavirus. Millions of Indian shoppers are still wary of visiting physical shops and this year, Meena expects online sales to rise by more than 34% to $6.5 billion.
“This is the time when consumers are actually in spending mode,” he said, adding that the roughly one-month sales period is expected to account for 18% of India’s total online shopping for 2020. “That’s why every company wants to win the battle during the festive period.”
According to the most recent Forrester report, Flipkart was India’s single-largest online retailer with a market share of 31.9 percent in 2018. In 2018, Walmart acquired the homegrown business for $16 billion.
Big Billion Days, Flipkart’s seasonal shopping event, kicked off on 16th October while Amazon’s Great Indian Festival began today.
According to Rajneesh Kumar, Flipkart’s senior vice president and chief corporate affairs officer, the company has developed its strategy around selling affordable products to the vast number of middle and lower middle class online shoppers in India’s smaller cities. “A significant number of people in India look for value for money,” Kumar said. “If you provide the right value and the right customer experience, you will win.”
The rivalry
Amazon, however, is a formidable rival. With a 31.2 percent market share in the Forrester survey, the company was just behind Flipkart and has built a strong reputation in the region.
The US firm was ranked in an annual survey conducted last year as India’s most trusted online retailer. The market research company announced that 10 times more respondents said they trusted Amazon than they trusted Flipkart, which came second.
“Flipkart and Amazon are neck-to-neck in the eCommerce wars, in terms of their product offerings, their initiatives to bolster affordability and increase consumer confidence, and most importantly, their last-mile delivery initiatives,” said Prabhu Ram, head of the Industry Intelligence Group at research firm CMR.
But he added that Flipkart has “an edge in terms of the amount of money customers spend” when it comes to festive sales. That’s because Flipkart dominates online fashion sales, adding that the business has good tie-ups with smartphone brands to deliver major discounts.
Diwali preparations
Earlier this year, as cities were locked down to fight COVID-19, Flipkart and Amazon both faced enormous difficulty shipping orders across the country. Since then, especially ahead of the festive season, they have worked to strengthen their supply chains.
In order to tackle the increase in holiday orders, Amazon opened a new factory in the country this month and employed 100,000 seasonal staff which is 10,000 more than last year. To tackle the rush, Flipkart said it employed 70,000 new warehouse and distribution staff, a 20,000-person increase from 2019.
Both firms have also translated their platforms into more languages, which they believe would help them attract more shoppers in smaller towns and rural areas in widely diverse country.
India’s online shoppers have been busy loading up virtual carts ahead of time as they wait for sales to kick in. Retailers typically offer deals on fashion, smartphones and consumer electronics, as well as holiday staples like candles, lights and other decorations.
New entrants
The festive sales battle takes place as Asia’s richest man makes a bid for the country’s rising eCommerce market. JioMart, which is part of the sprawling conglomerate Reliance Industries owned by Mukesh Ambani, created waves earlier this year when it extended to hundreds of cities across India, a step widely seen as a challenge to Amazon and Flipkart.
It just provides online groceries for now, leaving Flipkart and Amazon to take advantage if the smartphone sales, consumer electronics, clothes and household products. But soon, JioMart is preparing to enter the battle and Flipkart said it welcomes greater competition.
Kumar said that growing India’s eCommerce industry “needs so much investment on the ground to build the supply chain. More players are good, since the supply chain will be established with more and more investment.”
The competition is all set to intensify. According to an August report from consulting firm McKinsey, eCommerce revenues account for just 5 percent of India’s overall gross merchandise volume.
But now, because of the pandemic, “India’s digital economy is in the midst of taking off,” Ram said, adding that as rural parts of the country come online, businesses are also picking up new customers.
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