GST blues: e-retailers to see flatter sales this festive season

Even as e-retailers gear up to shower shoppers with discounts on the eve of the festive season, experts expect flat growth compared to last year. Despite the upcoming Big Billion Days sale from Flipkart or Amazon's Great India Sale or Paytm Mall's raft of offers, industry watchers say that the gross merchandise value (GMV) this year would be 10 per cent below last year's festive season, says a newspaper report.

Data released by market research and advisory firm RedSeer Consulting shows that the e-commerce industry clocked $210 million per day for a period of five days from 1-6 October in the 2016 festive season, which resulted in the market posting an overall GMV of $2.2 billion in the same month.

But, this year, ''Fatigue factor has seeped into the market, thanks to the pre-GST sale, which saw e-retailers offloading their entire stock at a discounted rate. Hence, consumers in tier 2 and 3 cities may refrain from buying during the festive season sale, though customers in metro and top 10 cities are expected to spend,'' FE cited a senior analyst as saying.

Much of the action will be restricted to Amazon and Flipkart. According to RedSeer, while Flipkart registered a mere 1 per cent growth in market share at 43 per cent in October 2016 from 42 per cent a year ago, Amazon India's market share more than doubled during the same period.

Amazon India's market share stood at 32 per cent in October 2016 compared to 15 per cent in October 2015.

Snapdeal, which was the third-largest player until last year, has been replaced by Paytm Mall, for which it will be the first festive season.

''A lot depends on factors such as how fast ecommerce firms are able to fulfil shipment this festive season by bettering of logistic services through addition of new warehouses, etc, besides adding new brands and stock keeping units (SKU). The more options ecommerce players add, the more they will be able to sell,'' Sreedhar Prasad, partner, Internet and e-commerce business, KPMG, told FE.

E-retailers have already started to add new warehouses, apart from on-boarding more products. Early this month, Amazon India nearly doubled its warehouse capacity at 13 million cubic feet by launching its largest warehouse at Jamalpur, Haryana. The company now runs 41 fulfilment centres across the country. Till December 2016, it operated 27 warehouses across the country with a 7 million cubic feet capacity.