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India expects festive ecommerce surge

News, 14 October 2015

NEW DELHI: Despite the economic slowdown, Indian consumers are expected to spend about $8bn (Rs 52,000 crore) as they go online shopping this festive season, according to the latest estimates.

Industry body Assocham said that would translate into a sales hike of 40% to 45% for ecommerce merchants this holiday season, which starts with Navratras and covers Durga Puja, Dussehra, Diwali and Christmas.

It predicted there would be more than a fivefold increase in revenue generated through ecommerce compared to last year with all branded apparel, accessories, jewellery, gifts and footwear available at cheaper prices.

Discounts, combination offers, home delivery and "aggressive" marketing are fuelling demand, the report said, while warning that improved ecommerce sales could come at the expense of brick-and-mortar stores in the major cities.

Among the driving factors Assocham identified for this anticipated growth in online shopping are tech-savvy younger consumers as well as the convenience of ecommerce, which can encourage snap purchases.

"The customer is connected 24x7 through their smartphones, tablets and other mobile devices which is leading to a gradual evolution of ecommerce into mobile commerce," said D S Rawat, secretary general of Assocham. "Also, there is an issue of convenience which also leads to impulsive buying," he added.

Especially important are consumers aged 15 to 35, who are described as "net savvy" and who enjoy the experience of new forms of shopping.

More generally, the report said consumers are turning to the internet because it offers fast and simple payment and delivery services, which is further stimulating ecommerce growth.

Snapdeal, one of India's largest ecommerce firms, saw a 15-fold increase in traffic during its Diwali discount period last year while rival Flipkart sold 2m products during its one-day sale event called Big Billion Day.

"Last year's festive season was a tipping point because, till that time, ecommerce demand was in bits and pieces with some people buying online and some not," said Rohit Bansal, co-founder and chief operating officer of Snapdeal, in comments to Quartz India.

"But last year, when most companies were expecting just 20-30% increase in demand, many of us did 10 times the normal business. It was ridiculously high and no one was prepared for it.

"Overall, the festive season will be exciting this year because the scale of ecommerce in the country is very different compared to last year."

Data sourced from Assocham, Quartz India; additional content by Warc staff