It will be raining discounts for buyers in India, particularly online. Thursday will mark the beginning of Amazon’s Great Indian Festival, the biggest sale in its history. The four-day sale period from September 21-24 will bring discounts of as much as 75% on some of the biggest brands. Amazon's arch rival Flipkart's Big Billion Days will be from September 20-24 and bring similar rebates.
Over the years, festival sales have emerged as the single biggest window of revenue generation. Hence, Amazon seems to be preparing like never before. In its bid to cater to a wider range of customers’ needs, the online marketplace has increased the number of products from the last festive season by 40% to 160 million across categories. The seller base has doubled to over 225,000 sellers.
“We have kept our approach very simple and very consistent – increase selection, provide better value and savings as well as make delivery faster. We expect more customers joining the digital ecosystem and shopping with us during this festive season. With expanded selection and a robust logistical support system, we are ready to handle the massive customer traffic that we are bound to receive this season,” an Amazon spokesperson said in response to emailed queries from Fortune India. An e-mail sent to Flipkart did not elicit any response.
To make deliveries faster during the festive season, Amazon.in has also beefed up its infrastructure – it now has 41 fulfillment centres across 13 states in India, with a storage capacity of over 13 million cubic feet. These also include nine specialised ‘heavy and bulky’ fulfillment centers for large appliances and furniture. Of its investments of over $2.1 billion in India so far, about 40% has been in developing and building infrastructure for sellers and customers.
Over the last one year, Amazon has seen nearly 400% growth in large appliances. The focus on this category this time is evident from the TVCs including a Rs10,000 discount for LED TVs. To be sure, during the festival sales, some categories will see discounts of as much as 60%.
Besides its exclusive partnerships with popular brands such as Moto, OnePlus, Xiaomi, GAP, IFB, BPL, LG, UnderArmour, Steve Madden Jewelry, Honor, Nokia and Blackberry, Amazon has introduced several initiatives for easier financing of purchases such as the Buy Now, Pay Next Year scheme, under which customers who transact on a particular bank’s credit cards and use an EMI option of three or six month tenures can get a three-month EMI holiday. Amazon.in has partnered with 11 banks to offer customers EMIs with six tenure options (3/6/9/12/18/24 months) along with Bajaj Finserv, compared with eight banks in the last festive sales period.
Why the preparation?
The battle for supremacy in the Indian e-commerce industry is a closely contested one. The overall e-commerce industry is expected to touch $100 billion by 2020, according to industry estimates. With Snapdeal out of the picture (it has decided to scale down operations), the title of numero uno is up for grabs for the two largest players–Amazon and Flipkart. In July, Amazon invested nearly Rs1,680 crore in Amazon.in, as part of its commitment to invest $5 billion to beef up the local business. Last month, SoftBank invested a whopping $2.5 billion in Flipkart. While cash is not a constraint for the two firms, wooing the opportunistic India buyer is. Lack of brand stickiness is something that e-commerce grapple with continuously.
For e-commerce firms, festival sales are an assured window to boost sales. “For e-commerce players, it’s all about volume and market share. Of course, there is an exhaustion around shopping but world over retailers have to create events on regular basis to excite buyers,” said Harminder Sahni, founder and managing director, Wazir Advisors, a retail consulting firm, referring to the pre-GST in July and Independence Day sales in August.
Buyer fatigue may actually be a reality. Devangshu Dutta, chief executive of retail consultancy Third Eyesight, believes that in urban centres the impact of festival sales has come down as sales happen around the year. “In the overall retail industry, sales are a bit flattened than a decade or two ago. Discounting is not a strategy if one is doing it all the time. Unfortunately in India, that's how e-commerce firms have been driving the market,” he said.
Traditionally, household expenses for the festival season, particularly Diwali, included budgeting for gold/silver/metals, clothes, white goods, furniture, decorations, and eatables. Dutta says e-commerce firms are not deviating buyers to new categories and are clearly focussed on white goods, furniture, clothes, and household items.
For now it seems, e-commerce firms will continue to go after the customer with discounts and easy financing models. Whether the customer is interested in buying or not is a different question.