The increasing internet penetration of India reflects the country’s consumption and buying habits. Although recession and slowdown has dented the sentiment of the market, most e-commerce portals witnessed a growth in sales in the festive season.
E-commerce portals usually tend to pass on more benefits to the consumers by offering cheaper deals and better discounts. This is usually done by taking a cut in one’s own margins. “Convenience and real-time discounts are the two basic reasons for the increase in the sales on our portal. We saw a growth of 30-40 per cent in the Diwali season,” said Nikhil Rungta, Chief Business Officer, Yebhi.com.
Vikas Ahuja, CMO, Myntra shared, “Our growth rate was in the range 35-50 per cent in the festive season. Although it is difficult to isolate recession, and it is understood that the range would have been better had the sentiment been stronger, stronger deals for customers have helped us.”
Apparels, mobile phones and to some extent footwear have been the most shopped categories online. Although the portals are male-dominated and men are frequent buyers online, women have started showing more interest in buying online recently. “Our portal has attracted more male customers, but of late, we have gained decent popularity among women as well,” said Pravin Sinha, Co-founder, Jabong.com. “That is correct, added Malini Sharma, Trend Watcher, ebay.com. She further said, “Men’s footwear and personal gadgets have been our prime sold products but women are increasingly accessing our portal and this is likely to increase.”
The Indian retail market is almost a Rs 31K crore industry, out of which bulk is unorganised. E-commerce has seen a tremendous growth in India in the last few years. Metros have been the prime contributor, but Tier II and III cities have also seen a significant rise in buyers. Most of the portals feel lack of digital infrastructure like low bandwidth and at times slow physical connectivity to certain small towns like couriers as prime hindrances for the e-commerce market in India.
Critics argue that trust is an important factor which has worked for portals. “Initially buyers are reluctant to make financial transactions online. But once a deal worked out for them, they find a portal convenient and reliable. Apart from this, the cash on delivery model has worked extensively in the local market. The scope of these activities is likely to increase. The difference would be which portal offers a better deal to the customers for the same product,” said Rupesh Sinha, Senior Digital Researcher, Franklin Investments.
Has recession been a spoilsport?
Auto sector is one of the few big sectors which has seen growth in sales this Diwali. Most of the other sectors are reeling under the effect of slowdown. In term of online portals, market experts feel that the prospects could have been better had the macro economic situation been better. “The growth figures for the sector are decent, but not optimistic. The growth rate should be around 75 per cent, but macro-economic conditions have certainly dented some sentiment,” said Sinha of Jabong.
Industry experts generally feel that recession has subdued the prospects for everybody and not just e-commerce. But the way the portals are progressing, traditional retailers including jewellery, have to re-define themselves as the growth margin between traditional retail sales and e-commerce has reduced significantly in the last five years and non-metros have increasingly contributed to it.