By Mugdha Variyar Mar 30, 2020 6:40:44 PM IST (Updated)
The e-commerce sector in India is estimated to have lost $400 million worth of sales during the last week starting with the 'junta curfew' on March 22, as operations were heavily disrupted forcing several platforms such as Flipkart and BigBasket to temporarily suspend services. What's scarier is that the losses are set to grow to $1 billion during the entire period of the nationwide lockdown, as per new data from market research and advisory firm Forrester.
The e-commerce sector in India is estimated to have lost $400 million worth of sales during the last week starting with the 'junta curfew' on March 22, as operations were heavily disrupted forcing several platforms such as Flipkart and BigBasket to temporarily suspend services. What's scarier is that the losses are set to grow to $1 billion during the entire period of the nationwide lockdown, as per new data from market research and advisory firm Forrester.
Starting with the junta curfew, e-commerce companies said transport of goods to warehouses was halted, authorities forced their warehouses to be shut and the police did not allow delivery personnel to make deliveries. The nation went into a complete lockdown starting March 25.
E-commerce operations began gradually picking up after central and state authorities intervened, but e-commerce giants Flipkart and Amazon are now only taking orders for essential services, and even e-grocers such as BigBasket and Grofers were working at only 30-40 percent capacity due to a thin staff.
The sector will also continue to grapple with low demand and a disrupted supply according to Satish Meena, a senior forecast analyst at Forrester.
What is more bad news for the sector is that the growth for 2020 is also expected to come to a standstill, with Forrester predicting a mere 5 percent growth for the sector compared to an earlier estimate of 26 percent growth this year.
E-commerce sector grew 28 percent in 2019 to touch $32 billion in Gross Merchandise Value (GMV), and including movie tickets and online media subscriptions, it touched $33.3 billion.
“Smartphones and fashion contribute over 50 percent of sales on e-commerce. But both categories have now been hit due to low demand, and they are also facing supply issues. We don’t see demand for these products picking up at least for six months,” said Meena.
“However, we will take another look at trends in June to see if there has been any change in customer behaviour, “ he added.
Groceries are in high demand on online platforms and are expected to grow faster. But the sector contributes 6 percent to overall GMV. Online grocery sales stood at $2 BN in 2019 as per Forrester.
The personal care and hygiene segment is also growing, but again contributes 4.5 percent of total GMV for e-commerce platforms.
While the e-commerce sector welcomed the government’s move on Sunday to now allow transport of all goods, without distinction between essential and non-essential, Meena says the forecast of impact on sales was made largely from a demand perspective, and thus, still seems bleak.
The e-commerce sector on average sees 2 million orders daily worth approximately $50 million.