September 19, 2017
On October 6, 2014, Flipkart launched Big Billion Day, an event that occurs within India’s festive season — a holiday period that accounts for 40% of the total sales of key brands in India. Now in its fourth year, Big Billion Day has expanded from a one-day event to five days. In 2014, Snapdeal launched similar sales to compete with Big Billion Day; the following year, Amazon launched its Great Indian Festive Sales. In 2017, the Big Billion Day promotion will begin on September 20 and Great Indian Festive Sales will start on September 21 to attract holiday buyers. Snapdeal will focus on pre-Diwali sales in the coming weeks.
A lot is changed since 2014 in India’s online retail market, which is now taking on the look of “Amazon versus everyone else.” Key themes for this festive season include:
- Amazon is looking to become an everyday online retailer. With a focus on big-ticket categories like consumer electronics, appliances, and housewares and high-frequency categories like fashion and grocery, Amazon is encouraging customers to use its platform to buy from more categories more frequently. In 2016, Amazon, powered by its launch of Amazon Prime, surpassed Flipkart as metro Indian consumers’ preferred online retail destination and is now looking to expand its wallet share among online buyers in India during this festive season.
- Flipkart is focusing on retaining its strong hold on smartphones and fashion. 2016 was not a great year for Flipkart. The company replaced both of its cofounders and appointed Kalyan Krishnamurthy as CEO — he represents Tiger Global, Flipkart’s biggest investor — when the company failed to meet its internal sales targets or counter Amazon. Now, after raising $1.4 billion from Tencent, eBay, and Microsoft in April 2017 and $2.5 billon from Softbank in August 2017 (including $1 billion in secondary investment), Flipkart is set to retain its strong market share in the smartphone and fashion categories. The company is expected to launch new products in the coming months to compete with Amazon Prime, challenge Amazon in the grocery category, increase its wallet share, and capture new buyers.
- Paytm is exploring online retail. Paytm is launching “Mera Cash Back,” which will run from September 20 to 23, to compete with Amazon and Flipkart to capture holiday sales. Paytm is focusing on providing cash back on purchases in categories like appliances, electronics, and smartphones; customers can spend the money they get back via the Paytm wallet. The firm plans to spend ₹500 crore (₹5 billion) on cashbacks and invest ₹1,000 crore (₹10 billion) in marketing and promotion. The idea is to test the feasibility of building Taobao for India, powered by the Paytm payments platform. The response that Paytm gets in this year’s festive season response may decide the future of Alibaba’s investments in India.
- Demonetization and the Goods and Services Tax (GST) will play a role. Online retail sales in India are still recovering from 2016’s demonetization, when the Indian government withdrew all ₹500 and ₹1,000 notes from circulation — which represented nearly 86% of all currency in use. The pre-GST sales in July may also have some impact on how much consumers spend on big-ticket items like furniture and appliances.
- An expected $1.2 billion to $1.5 billion in sales. In 2016, Amazon and Flipkart sold goods worth a total of $900 million during Big Billion Days and Great Indian Festive Sales. Keeping in mind the impact of demonetization and pre-GST purchases, we expect the two companies to sell a total of $1.2 billion to $1.5 billion worth of goods this year (see the figure above). This growth will be powered by the increase in the number of product categories and the discounts these two well-funded companies are able to offer.
We will update our online retail forecast for India in November. Meanwhile, for more detail on the future of the Indian online retail market, ForecastView clients can access our online retail forecast for Asia Pacific.