The sales still fell short of RedSeer’s pre-season estimate of INR 83,000 Cr ($10.16 Bn) by about 9%
During India’s month-long festive season, as many as 125 Mn Indians shopped online, at 1.26X YoY growth
Tier II+ cities accounted for 57% of the GMV and 64% of the overall customers during the festive season sales
According to a report by market intelligence firm RedSeer, ecommerce in India saw a strong festive season as online retail recorded INR 76,000 Cr ($9.3 Bn) in gross merchandise value (GMV) over the month of festive sales.
The figure represents a 25% increase year-on-year (YoY). However, the sales still fell short of RedSeer’s pre-season estimate of INR 83,000 Cr ($10.16 Bn) by about 9%.
Per an earlier RedSeer report, Indians had already shopped for goods worth INR 40,000 Cr ($5.7 Bn) by the end of the first week of the festive season.
Interestingly, during just the first four days of the festive season sales, ecommerce platforms had already sold goods worth INR 25,000 Cr ($3.5 Bn).
During India’s month-long festive season, as many as 125 Mn Indians shopped online, an increase of 1.26X YoY driven mostly by Tier II+ cities. Online shoppers from Tier II+ cities accounted for nearly 64% of the total ecommerce shoppers during the festive season in India, according to the RedSeer report.
Further, shoppers from Tier II+ cities accounted for around 57% of the GMV during the festive season sales.
Long-Tail Categories Grew The Fastest
Talking about categories, long-tail ones such as home, groceries and so on saw the highest YoY growth in GMV at around 1.86X. On the other hand, fashion grew by 1.32X, electronics by 1.13X and mobile by 1.07X.
“Democratisation of categories continued in festive as well, with long-tail categories growing faster than mobiles and electronics,” said RedSeer.
Incidentally, the average user spending remained flat over the festive period, owing to adverse macroeconomic conditions and increased inflation.
The first few days are the most crucial; 60% of all festive season sales happen during the first week. However, the average user spending of INR 5,200 was 41% lower than in 2018 and 30% lower than in 2019.
Tier II+ Cities Crucial For Ecommerce’s Success
At a time when other industries struggle to effectively monetise their innovation, ecommerce has been successful in developing customer behaviour of paying for a premium service. The pandemic helped cement ecommerce’s place as a viable alternative to offline shopping.
However, the reports of online shopping coming to a saturation point can’t be ignored.
The year 2022 has been nothing but a rough ride for all tech companies and startups, with the end of the year witnessing arguably the worst layoffs wave since the bursting of the Dot Com bubble.
Coupled with the reopening of malls and stores, along with a growing online fatigue among Indians, especially in the metro cities.
However, the rising share of customers from Tier II+ cities might prove to be a godsend for ecommerce companies in India. As the RedSeer report pointed out, customers outside of metro cities now contribute more towards overall GMV.
These customers are the key to unlocking the $400 Bn potential Indian ecommerce industry offers come 2030.
