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How e-commerce platforms are betting big on festive season

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E-commerce giants like Myntra, Amazon and Walmart-owed Flipkart have registered phenomenal growth over the past year despite pandemic related restrictions. A major part of this year’s festive season strategy for these platforms has been to onboard more customers from Tier 2-3 cities and focus on exports.

How e-commerce platforms are betting big on festive season
The festive season is fast approaching, and with it, the much expected yearly bumper discounts from e-commerce platforms are here. The importance of the festive season for e-commerce sales in India has been increasing over the last few years. While the COVID-19 pandemic battered many sectors, e-commerce withstood the disruptions and was quick to bounce back. The e-commerce industry in India managed to earn Rs 29,000 crore from sales during the festive season in 2020, an over 50 percent growth from the Rs 19,000 crore earned in 2019.
However, with the COVID-19 pandemic still around, companies have scrambled to shore up their platforms, supply chains and partners in order to prepare for the upcoming festive season, which is thought to exceed last year’s demand.
Around 91 percent of Indian consumers are planning to purchase products during the festive season in India, revealed a recently conducted survey by The Trade Desk and YouGov. The survey also found that 60 percent of respondents were interested in learning about new brands during festive sales.
Myntra, the leading online platform for apparel, expects this festive season to be bigger than last year as more customers are doing online purchases. Demand usually peaks in the 30 days leading to Diwali and this year will not be different, according to Ayyappan Rajagopal, Myntra’s Chief Business Officer, the Business Insider reported. In fact, demand in the two months leading to the festive season is expected to be far more than last time, Rajgopalan predicted, according to the report.
"It is for the whole country whether it is retail or online commerce, where customers want to buy new selections, get deals and have a great shopping experience,” Akhil Saxena, Vice President, Customer Fulfilment, Amazon, said in a recent interview, reported Business Standard.
A major part of this year’s strategy for e-commerce platforms has been to onboard more customers from tier 2 and 3 cities during festive seasons with carefully-curated offers and promotions. The massive growth in internet usage from smaller cities and the proliferation of smartphones have led to India becoming a leading market for e-commerce. Shoppers from India’s small towns and cities will cumulatively contribute to $150 billion of e-commerce sales in the coming decade, revealed RedSeer, a management consultancy firm.
A key way to target tier 2 and 3 cities have been by onboarding and digitising SMEs and launching their products during periods of sales and promotions. Companies like Walmart-owned Flipkart and Amazon have claimed that they have managed to make thousands of sellers into crorepatis through their promotional events. Most of the sellers belong to tier 2 and 3 cities and make up a significant portion of the local e-commerce marketplace.
E-commerce platforms are turning to MSMEs to not just fulfil demand from smaller cities, but also bolster e-commerce export from India to other countries. Amazon and the Gujarat government recently signed an MoU for the same. Amazon has already signed similar pacts with states like Punjab, Karnataka and others. Ahead of festive season sales and exports of Indian made goods often increase to keep up with the demands of the diaspora as well as general demand from other countries.
“The Amazon Global Selling programme has already enabled more than 70,000 Indian exporters to cross $3 billion in cumulative exports, showcasing millions of Made in India products to customers across the world. The programme is witnessing tremendous momentum with increasing interest from exporters across India,” said Abhijit Kamra, Director, Global Trade, Amazon India to the Financial Express.
Most of the e-commerce players are investing more in bolstering their supply chains ahead of the festive season. Facilities have been scaled up, with additional fulfilment centres and sorting centres in states which are expected to have high demand, like Haryana, Maharashtra, Karnataka and others. Seasonal hiring in logistics for tier 2 and 3 cities have also ramped up by up to 30 percent, according to reports.
“Ahead of the festive season, we will increase the storage capacity of the fulfilment network by 40 percent,” added Saxena.
But even as e-commerce platforms scale up their supply chains, the COVID-19 pandemic will still leave its mark on the otherwise booming sector. The ongoing chip shortage, which was largely exacerbated by COVID-19 restrictions last year, will cut into the supply of electronic goods. As a result, many e-commerce platforms will not be offering the expected promotions on items like phones and laptops.