Diwali deep dive: Rural online shoppers powering India’s festive season
India’s biggest festive season Diwali has just ended, and the standout trend from this year’s event is the participation of rural online shoppers in growing e-commerce sales across the country. Following two years of a lull due to the pandemic, Indian retailers across sectors were betting big on this season to bring cheer to the otherwise sluggish economic scenario. And while a complete picture of such retail trade across the vast country is still emerging, the early signs are pointing
ing to a very satisfactory result.
Traditionally, the festival of lights is an important period of shopping in India. The festival is associated with prosperity and wealth creation. This is the time when businesses of all sizes dole out annual bonuses and special packages to staff – arming the citizenry with more spending power than any other time of year.
Diwali is also followed by the traditional wedding season, which only adds to the euphoric mood spurring big-ticket purchases. Given that this festive season falls in the middle of India’s financial year (March to April), it sets the tone for businesses’ economic health in the second half.
If the recent traffic snarls, decorated showrooms and heavily crowded markets were any indication of the strength of this season’s trade, the actual retail numbers set to be released in the coming months will be impressive. Something that has been missing for the past two years. Yet, what stands out most this season is the growth of the online retail sector.
Industry estimates suggest that between 75 and 80 million shoppers placed orders across many e-commerce platforms during the festive week. Almost all the e-commerce players ran special sales during this festive occasion.
Major players drive online spending spree
With a population of 1.4 billion people, increasing mobile penetration and cheaper internet costs, e-commerce is among the most promising sectors in India. A growing middle class equipped with more disposable income than ever only helps.
A case in point is the record number of sales of mobile phones this year. According to the marketing and research consultancy, Redseer, about 56,000 mobile handsets were sold online every hour during the Diwali sales. Mobile phones, large appliances and electronic items usually account for the lion’s share of spending.
It is estimated that the gross merchandise value (GMV) of e-commerce transactions in the week preceding Diwali was 400 billion INR (US$5.9 billion), compared to 350 billion INR in the pre-pandemic year of 2019.
Demand for small-ticket loans from digital lenders also witnessed an upsurge. All the major e-commerce players, including Amazon, Walmart-backed Flipkart and Meta-supported Meesho, collaborated with multiple financial institutions to offer cashback and easy loan options.
Flipkart, one of India’s e-commerce powerhouses alongside Amazon, boasted that it received a billion customer visits during the festive period this year.
“We can cover eight times the distance between Earth and the International Space Station with the shirts sold in the men’s clothing category. India can be covered from the north to the south 4 times over, with the length of sarees sold,” Flipkart announced proudly in its roundup report after the sales.
The Bangalore-headquartered company said that over 60 per cent of its shoppers were from the semi-urban and rural parts of India. Meaning that digital offerings and online shopping are increasingly being powered by India’s hinterlands and are not just an urban phenomenon.
Ever since e-commerce gained a foothold in India, all the major players have been capitalising on the big season to celebrate with steep discounts, offers, and easy payment options.
As per the forecast of the country’s main umbrella body of traders, Confederation of All India Traders (CAIT), the festive period sales – between the end of September and early November – will cross $27 billion with nearly half of them coming from online.
Such indicators are a sign of hope amid widespread worries about a gloomy economic situation and dull fiscal demand.
India’s growing e-commerce sector
India’s online retail industry is forecast to be worth $133 billion by 2025 from $72 billion this year, as per asset management firm AllianceBernstein. Most other forecasts by reputed consultancies echo similar predictions.
Some of the biggest names in offline retail, such as Reliance, are already in the race to corner a bigger share of the online pie.
The total number of internet connections in the country stood at 830 million last year and continues to grow rapidly. Home to over 190 million online shoppers in 2021, India is the third-largest customer base in the world and is likely to overtake the US for the second position in the coming months.
The pandemic has been a catalyst to accelerate India’s digitisation efforts, particularly in the non-urban regions of the country and increasing connectivity. And such efforts have begun to pay off this Diwali.
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