Amazon India’s Festive Season: Premiumisation Emerges As Key Trend

After all the buzz around the fight between ecommerce marketplaces and quick commerce giants, how did Amazon India fare in the 2024 festive season sales? 

For the US-based ecommerce giant, the Great Indian Festival, which ran throughout October this year, the biggest takeaway is that Indian online shoppers are rapidly moving towards premiumisation, and of course, want the convenience of same-day or next-day deliveries. 

Kishore Thota, Director for shopping experience (India & Emerging Markets) at Amazon India, told inc42 that the demand for premium product categories has unlocked a new insight for the ecommerce marketplace about where the Indian market is heading. 

Plus, given the prominence of quick commerce today, Amazon India also invested heavily in the delivery experience, which seems to have paid off for the company during this festive season. 

What Worked For Amazon India? 

A Datum Intelligence report claimed that ecommerce GMV for the festive season crossed the INR 1 Lakh Cr mark ($12 Bn) in 2024, as against INR 81,000 Cr in 2023 and INR 69,800 Cr in 2022. 

This massive leap over 2022 and 2023 shows that even if the total audience base for ecommerce has shrunk (as indicated last year), these customers are making larger purchases and paying premium prices for products in the same categories as compared to last year. This is further validated by the fact that Tier II and III cities led the surge in demand for premium products, according to Datum’s report. 

For instance, smartphones and mobile devices accounted for 60% of the festive season sales this year, which is much higher than what was seen in the last two years. 

Both Flipkart and Amazon said in an earlier statement that premium smartphones were in demand with people looking for AI-embedded features in the latest smartphones for brands such as Samsung, Google Pixel and Apple.  

Thota added, “This festive season, Amazon saw several key trends emerge. Non-metro cities played a significant role, with over 85% of customers and nearly 70% of Prime members hailing from tier 2 and 3 cities, highlighting the growing reach of ecommerce across India’s heartland. “

Amazon India’s Thota said that premium smartphones, large TVs and home appliances were hugely popular for Amazon customers, and this was largely fuelled by EMI, no-cost EMI options especially for Tier II towns and beyond. .

“Electronics saw strong demand, particularly in laptops, where both non-gaming and gaming variants saw up to a 30% increase in sales, with Intel-powered laptops and premium Intel i7 gaming laptops witnessing substantial growth. Audio products also gained traction, with truly wireless earphones and Bluetooth speakers growing over 50% year-on-year,” the Amazon India director told Inc42. 

Sellers See Festive Riches

Amazon India Marketplace ‘s FY24 revenue saw a 14.4% YoY jump to INR 25,406 Cr as against INR 22,198 Cr in FY23. The marketplace got an INR 2,500 Cr infusion from its US parent as it looked to strengthen its festive season play, particularly related to fulfilment centres and warehouses. 

The ecommerce giant relied heavily on the festive season sales this year to scale its revenues and losses still touching INR 3,469.50 Cr in FY24.

Cost cutting is a big focus for Amazon India in the run up to next year. The ecommerce giant is reportedly shifting its headquarters in India to a new location in Bengaluru, as part of a cost reduction strategy.

The company also saw a leadership change this year with Manish Tiwary stepping down from his role and Amazon India veteran Samir Kumar named as the new country manager for India. There’s some scrutiny on the seller side, but for Amazon, the biggest takeaway has been the diversity of sellers on the platform.

Thota said seller success was a big outcome for Amazon India and something the company has chased in the past year, as this goes a long way towards establishing it as a channel for merchants. 

This year, the company claimed to have seen a 70% increase in the number of sellers surpassing INR 1 Cr  in sales, and more than 42,000 sellers achieved record single-day sales. 

Small businesses, including local artisans and entrepreneurs, also saw significant demand from both urban and rural markets, Thota claimed, backed by Amazon Pay and EMI options for customers. 

In particular, categories such as home and kitchen, household appliances, fashion and beauty drove the business for sellers. Within fashion and lifestyle, for instance, the premium segment saw a 400% increase in sales, driven by watches, fragrance, and jewellery.

“Customers enjoyed 60% higher exchange discounts compared to last season, with some discounts as high as INR 80,000. This provided shoppers with significant savings on high-ticket items, especially in categories like electronics, large appliances, and fashion.”

Taking On Quick Commerce

With quick commerce also entering these categories, the game has shifted to fast deliveries. Amazon is mulling an entry into this space later this year or in early 2025, but it’s not clear what the model will be like. 

Flipkart Minutes, for instance, has blended learnings from running a marketplace with lessons from quick commerce, and has a hybrid delivery model ranging between 5 minutes to 30 minutes. Others such as Swiggy Instamart are moving in this direction. 

Thota claimed that Amazon’s commitment to fast and reliable delivery was clearly demonstrated during the festive period. In the run-up to the festive season, the company partners with India Post to boost its last-mile logistics play. 

“Over 3 Cr products were delivered within the same day or next day,especially to Prime members. Significantly, Prime members across more than 9,000 pin codes in India received their deliveries within 48 hours of placing their orders.”

According to Thota and indeed other analysts in the ecommerce space, one of the advantages for ecommerce marketplaces is the service capacity they have built up over the years. Services such as warranty claims, replacements, installations are not yet up to par on quick commerce platforms yet. 

Thota added that Amazon’s end-to-end solutions, including installations and extended warranties on appliances, were made available across over 400 cities with instant installation at delivery offered in 55 cities. 

These are moats that marketplaces such as Amazon India can count on for the time being in the fight against quick commerce giants Blinkit, Swiggy and Zepto. How long will this advantage persist?

[Edited By Nikhil Subramaniam]

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