Online, offline retail converge to bind fortunes in festive season – business news

Online and offline retailers in India have buried their long-running hostility to bind their fortunes together this festive season, a detente that has been possibly forced by the unprecedented changes in consumer behaviour due to the pandemic.

Millions of offline outlets, ranging from big chain stores to small neighbourhood ones, are participating in the ongoing Flipkart’s Big Billion Days (BBD) and Amazon’s Great Indian Festival. The old adversaries have formed new partnerships to offer shoppers a wider selection of products at attractive prices.

With physical stores struggling to revive sales as consumers avoid trips to crowded markets for fear of infections, e-commerce firms are using this opportunity to onboard brands and bring their entire store inventory online for customers.

Consultant Redseer has estimated that gross merchandise value clocked by e-commerce firms in this festive sales will surge to $7 billion from $3.8 billion in 2019. However, the value of the average basket size of online shoppers will be 13% less as people have lost jobs or seen their income reduce.

A large number of consumers will shop online (75%) and will also consider shopping in standalone stores (66%), as opposed to malls, with a 33% dip in shoppers in the latter, the Retailers’ Association of India (RAI) and LitmusWorld said in their 2020 Festive Shopping Index.

Flipkart, which kicked off its BBD sale on October 16, saw close to 50% of its new customers coming from tier 3 towns, the e-commerce major said on Friday.

“More and more people are searching and browsing products online in a big way,” said Kumar Rajagopalan, CEO, RAI.

Sandeep Kataria, CEO, Bata India Ltd said that early signs emerging from Durga Puja in eastern India suggest that people are tired of being locked up at home and are keen to go out to shop. “A lot of them will come out, but yes, the online commerce will be higher than the previous years,” he said in an interview.

While Redseer predicts festive sales this year to bring 50 million new shoppers online, India’s e-commerce market is still just 4-6% of the overall retail sector.

“Online sales channels did have an initial advantage, but we expect the brick and mortar store to see a jump this festive season,” said Sundeep Chugh, chief executive officer at retailer Benetton India.

Meanwhile, e-tailers have deepened their partnerships with offline retailers ahead of the peak festive season. Landmark Group’s various brands, including fashion retailer Max, have partnered with both Flipkart and Myntra.

Flipkart has partnered with more than 100 brands and 2,000 fashion stores to help them showcase their retail selection to nearby pin codes in more than 300 cities. Amazon India’s ‘Great Indian Festival’ sale starts on October 17 and will offer more than 40 million products from MSMEs, partnering with around 650,000 sellers along with over 100,000 local shops and kiranas.

“We expect that right after the festive season peak, e-commerce will contribute to 10% of overall retail in India, post-which it might flatline and settle at a contribution of 6%. Offline retail and ‘window shopping’ is still a big form of entertainment for tier 2 customers as full recovery of overall retail in India to pre-covid levels is expected by the first half of 2021,” said Mrigank Gutugutia, director, e-commerce, RedSeer Consulting.

Manish Tiwary, vice-president of Amazon India, said that online shopping will be a mix of both value and occasion-led buying in this festive season.

Smartphones, the largest category in terms of gross merchandise value for e-commerce players, are especially expected to sell well.

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