Bengaluru: Top online retail firms led by Flipkart and Amazon may generate as much as $3 billion of sales during the five-day festive season face-off between the country’s largest e-commerce firms next month, according to a new report from Red Seer Consulting. The gross merchandise value (GMV) generated in India’s e-commerce business during Diwali may touch $2.5-3 billion this year, according to the report. This would imply that sales during this festive season would effectively double from last year.
Mint reported on 17 August that Flipkart is targeting sales of $1.5-1.7 billion in its annual Big Billion Days sale, nearly double of what it did last year.
Amazon, which hosts its flagship Great Indian Festival sale during the Diwali season, has also set aggressive targets internally and is expected to go all-out to beat Flipkart.
The festive season face-off between Flipkart and Amazon is easily the biggest annual showdown in the Indian e-commerce business and usually sets the tone for the market share battle between the two rivals over the subsequent quarters.
E-commerce firms typically generate a majority of their annual sales in the festival-filled Diwali quarter when customers spend on a host of products.
“If you look at the number of people who purchase high-value products during the sale season, it’s gone up significantly over the past few years and will continue to do so. This kind of consumer behaviour was not common earlier,” said Sreedhar Prasad, partner and head of consumer markets at KPMG.
“The needle is clearly moving from offline to online for a certain subset of customers, who are now more confident of ordering items such as TVs and fridges online. It will be interesting to see how the fight plays out between the top two-three players during the sale season, given that we are going to see a massive spike in online orders during this period,” he added.
For both Flipkart and Amazon, winning the festive season battle is their biggest priority for the entire year, and much is at stake for both the companies.
For Flipkart, it would be the first Diwali sale after being acquired by Walmart, and India’s e-commerce poster boy would be keen to get off to a winning start under its new parent company. For Amazon, it could prove to be a make or break sale. Executives at Amazon India are under immense pressure to turn the tables on Flipkart and re-assert themselves as the dominant online retailer in the country, after lagging their arch-rival for the better part of the last two years.
Mint had reported in August that Amazon had pumped in ₹ 2,700 crore (nearly $386 million) into its Indian business, bringing its total investment in India to at least $4 billion till date. Flipkart is also sparing no expense for the festive season. Its current average monthly burn rate is around $80 million (also accounting for Myntra and PhonePe), but that figure is expected to go up significantly during the Diwali sale month, according to two company executives.
Amazon India typically boasts of a greater assortment of products during the festive sale. Flipkart, on the other hand, focuses more on putting together a compelling collection of exclusive brands and products for such sale events.