Online marketplaces in India recorded a significant slowdown during the festive shopping season, with gross merchandise value (GMV) falling by nearly 10% compared to last year. Data from Datum Intelligence, reported by the Economic Times, indicates that GMV for the first four days of the sale period ranged between ₹29,800 crore and ₹30,900 crore, down from ₹33,200 crore during the same period in the previous year.
Why Are Festive E-commerce Sales Declining?
Several factors are contributing to this unexpected dip in festive e-commerce sales. A primary reason is the substantial increase in smartphone prices. Brands have raised device costs due to mounting pressure from component expenses and persistent memory chip shortages, making premium devices less accessible to a broader consumer base.
Another contributing factor is the absence of a GST-cut boost, which had stimulated demand during last year's festive season. This additional stimulus is missing this year, impacting overall consumer spending.
Furthermore, there's a noticeable diversion of consumer spending towards quick-commerce platforms, which offer rapid delivery for everyday essentials and smaller purchases, potentially siphoning off some of the festive budget from traditional e-commerce giants.
Premium Segment Shows Resilience
Despite the overall slowdown, e-commerce leaders Amazon and Flipkart have highlighted a growing demand within the premium electronics segment. Amazon reported that Android smartphone sales in the first two days were 20 times higher than on a regular day. Similarly, Flipkart noted strong demand for premium and flagship smartphones, aided by product exchange schemes and no-cost EMI offers.
However, the mobile phone category's overall contribution to total festive sales is projected to drop to 30% this year, down from 35% last year. Counterpoint Research also forecasts a 12% decline in India’s smartphone market during this festive season, signaling a challenging period for retailers despite expectations of record sales over the full festive period.