Festival sales: Flipkart, Amazon to battle it out for new customers

Flipkart and Amazon.in are set to engage in a fierce battle for customer mindshare and market share beginning Wednesday when Flipkart’s annual five-day Big Billion Days sale goes live followed by Amazon.in’s Great Indian Festival sale from September 21 to 24, with the sale for Prime members starting Wednesday noon.

This time around, both e-tailers are looking to net the next 50-60-million new customers largely from tier II and III cities in a market which currently comprises 120 million online shoppers.

With Snapdeal out of the race this year, both Flipkart and Amazon are going all out to offer customers deep discounted deals running up to 80-90 per cent, with a combination of exchange offers, no-cost EMIs, cash backs on wallet/card payments and buy-now-pay-later deals.

While Flipkart has over 80 million products from over 1 lakh sellers, Amazon has upped its product selection to 160 million from a seller base that has grown to 2,25,000. This time around, Amazon has caught up with Flipkart — which had the lead with exclusive smartphone deals last season — and announced over 150 exclusive smartphone deals at various price points.

Smartphones continue to be the largest contributor to GMV (gross merchandise volume) for the e-tailers, followed by large appliances such as TVs, refrigerators, washing machines and ACs. Fashion apparel/accessories and consumables continue to be the largest selling in terms of unit sales.

Analysts say the jury is still out on who will take pole position during this ‘make or break’ festival season sale, as both Flipkart and Amazon have made sure they have covered all bases for this year’s sale.

“This year’s festive sale will generate a GMV of ₹10,000 crore, a 60 per cent increase over the previous festival season, driven by the impact of Reliance Jio which will add a large number of first-time shoppers, resulting in a 40-50 per cent YoY growth in unique shoppers during festive days,” said Anil Kumar, CEO of RedSeer Consulting.

“These first-time shoppers from smaller cities are likely to prefer shopping for lower ASP (average selling price) products and multiple purchase items such as fashion and home décor.”

While Flipkart is looking to net 45 million new customers pan-India through a hyper-segmented, personalised online video ad campaign, Amazon has widened its non-metro reach through Udaan, its assisted e-commerce initiative, where it has partnered with over 6,000 kirana stores, mobile stores, pharmacies, who will help locals shop online.

Cash burn, which amounted to ₹1,200 crore last season, is expected to rise to ₹2,000 crore this season, said Kumar, warning that all expenditure will be in vain if e-tailers do not get customer and seller experience 100 per cent on track this year.

“This is especially important on the customer side, as thousands of first-time internet users driven by the Jio effect will shop online this season. It is crucial to delight them in order to make them stick to online shopping in future.”

The e-tailers’ obsession with growing GMV through the sale of big-ticket items through deep discounted deals may be a great way to win new customers in tier II and II cities. However, since these are one-time purchases, it is crucial for the online platforms to retain new customers with a product assortment that inspires repeat purchases — such as apparel, accessories, home décor, consumables and groceries, observes Jessie Paul, CEO of brand and marketing advisory firm Paul Writer Strategic Advisory. “The winner will not be determined by whose GMV is higher, but who is able to retain customers who will continue to buy every month, thereafter,” she said.

“Customers have never had it so good before. We will drive ₹100 crore in GMV for our e-commerce partners, a major chunk of which will go to the top seven. We have increased cash-backs to ₹2.5 crore from under ₹2 crore last year,” said Swati Bhargava, co-founder of CashKaro.com, which drives traffic to e-commerce sites.

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