A sequel to the previous assessment of the Indian festive season sale 2023, which started from 7 october. This is with particular reference to ecommerce and the category of mobile phones
-Festival season is considered as an approx 30 day period expected to end around or a few days after Diwali, which is on 12 november
-It has been a record festival season for India’s e-commerce players, particularly arch rivals Flipkart and Amazon. Within the initial 48 hours of their sales, these two platforms recorded a staggering 186 million customer visits. Flipkart expects a gross merchandise value (GMV) of ₹36,000 crore (usd 4.4 billion), more than 30 percent of the over ₹90,000 crore (usd 11 billion) GMV expected in the 30 day period.
-The four weeks of the current festive season sales are expected to account for over one third of the entire year’s sales for Flipkart and Amazon.
-For the first time ever, Apple alone sold more than 1.5 million units of its iPhone range in the first week of the sale.
-One estimate says India has 800 million mobile users, out of which 200 million still use feature phones. Another estimate says India currently has 931 Mn smartphone users. Still trying to assess the real number.
-The smartphone market in India recorded 43.0 Mn shipments in Q3 2023
-While these eye-popping numbers might suggest that e-commerce has finally turned the corner in India, the balance sheets tell a very different tale.
-More than 15 years after it started operations in India, Flipkart is yet to make a paisa in profits.
Flipkart has reported increased consolidated loss to ₹4,890.6 crore in FY23, according to a Reuters report citing business intelligence platform Tofler.
-A decade into its India play, Amazon India has reported a loss of ₹3,649 crore in FY22.
-Do note that in the case of both, we are referring to losses for just one year. For ten and fifteen years respectively, neither Amazon India nor Flipkart has made any profit.
-Apparel, personal care, beauty and budget jewellery are some of the fastest moving items on e-commerce platforms.
-There is also growing competition from deep-pocketed rivals like Reliance Retail and the Tata Group, both of which have made substantial forays into the e-commerce space.
-There is the strong push back from offline retail, particularly in metros and large towns, where Flipkart and Amazon have seen most of their growth come from.
Offline retailers have added 4.73 million square feet of space in the January-September 2023 period across the top 8 cities in India. According to real estate consultancy CBRE. This is a 46% rise over last year, signifying renewed confidence in the return of offline shopping.
-E-retailers appear to be riding a tiger they cannot get off easily. The massive surge in volumes is backed by huge investments on creating the necessary logistics infrastructure to cater to a sub-continent-sized market. However, the volumes necessary to make these infrastructure investments viable is fed by deep discounts.
I would define this current phase the world is experiencing as “Richflation”. What this means is that for a majority of the global population, inflation is for real. Yet, not for all.
Somewhere, at a subconscious level, almost all the world has realized that pandemics like the covid are great levellers for all. Hence, a forced suppression of freedom for over two years is manifesting itself into a surge in “Living for the moment”, which in turn is translating into an increase in premium product purchases of all kinds, including luxury housing. This is happening at levels where disposable incomes and savings are higher. This is also happening due to ease of being able to buy now, pay later.
Information sources – RedSeer, Counterpoint, CBRE, Mint, ET, Statista, Reuters
Do lookout for my article on Technology trends in 2024 – to be released by end November