Online sales growth same as last year, no major jump due to COVID impact

This festive season has seen 30-40 percent growth in e-commerce volumes with overall growth similar to that witnessed last year.

Online sales growth same as last year, no major jump due to COVID impact

A report by financial services major, , said: “While not a negative surprise, we had anticipated a much higher growth for this season given the COVID impact.”

This festive season has seen 30-40 percent growth in e-commerce volumes with overall growth similar to that witnessed last year, the report said.

“This, in our view, either reflects unlocking ensuring a better than expected offline momentum or the impact of weak economy on overall festive demand. Our offline checks suggest a mixed read on festive trends with some categories seeing strength and some others still down year on year,” the report said.

Another interesting read was that there were no major supply constraints this season suggesting adequate channel re-stocking.

The just-concluded festive season in India was expected to have an increased dependence on e-commerce channels given the impact of COVID.

“Our analysis of consumer income and demand patterns over the past few months had suggested a better situation for Tier 3/4 geographies and e-commerce trends suggest a similar pattern,” the report said. While growth for e-commerce channel emerged from all geographies, Tier 3/4 outpaced Metro and Tier 1/2 with booking from these markets increasing to 60 percent of mix vs 55 percent last year.

Tier 1 and 2 mainly comprised existing shoppers who are buying more, while Tier 3 and 4 reflect new online shoppers.

Apparel (including footwear and sportswear) continues to be the largest category in e-commerce with consumer electronics (mobiles, laptops etc) being the No 2 category.

Categories which are gaining scale are grocery, home personal care and household goods. The widening of category choices from consumers also reflects the willingness of consumers to experiment, reflecting their trust on online platforms. Consumer durables have seen 165 percent growth in volumes this festive season with almost all products (TV, AC, washing machine), witnessing a spike in growth.

Comfort on online shopping is increasing. Sharp reduction in return orders which declined by over 25 percent, and is a good indicator of increased consumer engagement with the online platform and also reflects the quality of growth. Increasing trust on online payments as indicated by lower share of COD (cash on delivery) orders (55 percent now vs 65 percent pre-COVID). While COD as a mode of payment may remain relevant due to ease of use (Quicker checkout, consumer comfort on delivery timelines etc.) online payments should continue to gain ground, the report said.

The analysts interacted with the top management of Delhivery, India’s largest independent private e-commerce logistics company, to understand the consumption trends this season.