Festive boost: Online sales may see a 20% jump as Ganapati kicks off celebrations

• Around 140 million shoppers are expected to be transacting online at least once this festive month, says Redseer.
• Sales are expected to come from high-margin businesses like beauty & personal care, home & general merchandise, along with fashion.
• D2C brands are expected to grow 1.6 times faster than the broader market.
  

Indian e-tailing or e-retailing has a lot to celebrate this season — if Redseer Strategy Consultants are to be believed, 2023’s festive season sales will rake in approximately ₹90,000 crore in gross merchandise value (GMV). That’s 18-20% more than what was sold last year.

“This growth will be driven by about 140 million shoppers who are expected to be transacting online at least once during this festive month,” said the report.

India’s festive season kicks off next with Vinayaka Chaturthi celebrations that last nine days, followed by Navratris and extends all the way to November with Diwali.

Persistent premiumisation

The sales this year are also expected to come from high-margin businesses like beauty & personal care (BPC), home & general merchandise and fashion etc.

There will be persistent premiumisation leading to rising average selling prices. Increasing ads and promotion revenues will possibly make this year’s festive season the most efficient from a margin perspective, the report added.

“Over the last several quarters, we are seeing enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification,” said Mrigank Gutgutia, partner at Redseer Strategy Consultants.

The willingness of consumers to purchase ‘multiple categories’ online also bodes well for the sector.

D2C to zoom ahead

The expected boom in sales is also expected to bring in moolah for D2C brands in addition to traditional retailers. The consultancy firm expects these brands to grow 1.6 times faster than the broader eTailing market.

Metros have been growing faster at 10% for the last few quarters; and Tier 1 and Tier 2+ towns are growing at around 8%. But this festive season, the growth might be robust for both, it expects.

On an overall basis, the consumption trends are also improving, claims the consultancy firm. The annual growth rate of Private Final Consumption Expenditure (PFCE) has bounced back to 9% – which was around what it was before the pandemic.

Over the last few years, there has been flux in the market due to Covid-19 pandemic and other shocks like the Russia-Ukraine conflict. But these trends are also reversing.

“Interest rates are maxing out, countries aiming to resolve the Russia Ukraine conflict, and the Indian economic growth numbers are coming in strong. So, there are meaningful tailwinds to support a relatively strong festive period this year,” the report added.

Moreso, the total annual GMV for 2023 is expected to be around ₹5,25,000 crore, as the number of transacting users have jumped 15 times over the number in 2014.