Festival Sales: E-commerce firms report a jump in demand from Tier 2 and beyond

Yatti Soni Bengaluru | Updated on October 05, 2021

This year, sales are expected to grow 23 per cent y-o-y to touch about $9 billion gross GMV

On the first day of festive season sales, e-commerce players have reported jump in demand from Tier 2, 3 and beyond cities as compared to the last year.

Walmart-owned Flipkart saw about 45 per cent of customer demand from Tier 3 cities and beyond. Amazon noted that the number of sellers receiving an order from Tier 2 and 3 cities has jumped 21 per cent over the last year. Two out of 3 new Amazon Prime sign-ups have also come from Tier 2 and 3 cities.

Indian e-commerce platform Snapdeal reported that about 43 per cent of its orders came from Tier 3 cities in the initial days of the festive sale season. Flipkart-owned fashion retailer Myntra reported over 4 million sold items on the first day of its festive sale, of which 40 per cent were from Tier 2 and 3 cities and beyond.

Enhanced accessibility

In preparation for the festive season, e-commerce players have been enhancing the accessibility of their platforms. Weeks before the festive season, Amazon announced plans to add Hindi support to its voice shopping experience and Marathi and Bengali to its customer shopping experience (in addition to the existing six Indian languages). Flipkart also noted that this festive season was the most inclusive and sustainable in the eight-year history of the company’s ‘The Big Billion Day’ sale. The Flipkart app is currently available in 11 Indian languages.

Also see: Flipkart, Amazon lead in seasonal hiring

On the first day of this year’s festive sales, Flipkart saw sellers transacting from 124 new cities including Hingna (Maharashtra), Baghpat (Uttar Pradesh), Attingal (Kerala), Sambhal (Uttar Pradesh) and Dewa (Uttar Pradesh), and others.

Increasing acceptance

Nandita Sinha, Vice President – Customer and Growth, Flipkart, said, “E-commerce is clearly gaining increasing acceptance among the masses, and it is evident that user-friendly technical and financial constructs are helping drive its adoption.”

In an earlier conversation with BusinessLine, Manish Tiwary, Vice President - Amazon India, said, “Based on what we’ve seen on Prime Day and Small Business Day, we expect close to 85 per cent of new customers this Diwali to come from Tier 2 and beyond. A couple of years ago, this figure would have been closer to 60 per cent. So not only is the base growing, but the contribution from smaller towns is also growing.” He added that this trend is not just limited to Amazon; Across the industry, the number of orders from smaller towns have seen a significant shift.

Growth in sales

Further, early access for Flipkart Plus customers saw a 40 per cent growth compared to last year. During Prime Early Access on Oct 2, the number of local shops participating in the event more than doubled compared to last year. The company saw a 60 per cent increase in sellers who received their highest ever single day sales year-on-year on and 16 percent more sellers received orders over last year.

Also see: Amazon writes to Piyush Goyal countering CAIT’s allegation on legal expense

This year’s festive sales are expected to grow 23 per cent y-o-y to touch about $9 billion gross GMV during the whole festive month, according to consulting firm RedSeer’s latest e-commerce Festive Season Report.

The growth will be mostly driven by the accelerated online adoption which has been witnessed as an effect of covid-19, the consulting firm added. Secondly, customers from Tier 2+ cities were noted to continue to drive growth as they are 55 per cent - 60 per cent of the total shopper base this year, similar or higher than 57 per cent in 2020 festive days.

Published on October 04, 2021

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