E-tail will receive $ 1 billion in closing
Digbijay Mishra and Madhav Chanchani | TNN
Bangalore: The 21-day blockade will lead to a loss of at least $ 1 billion in gross sales as India's largest online retail platforms like and Flipkart Stop selling non-essentials until at least the middle of next month, according to current government directives. What is even more worrisome is that online retail players are expected to grow just 5% this year, in the most optimistic scenario, compared to growth of approximately 26% in the previous year to reach $ 23-24 thousand million in gross sales. Total sales, including tickets to the cinema and other platforms, were $ 32 billion in 2019, according to data from market research firm Forrester that was shared exclusively with TOI.
While an increase in orders is seen online, it makes up only about 10% of total sales for e-retailers. Last year, sales of electronic groceries reached $ 2 billion. Online platforms see $ 50-60 million in daily sales at this time of year, which for multiplayer has dropped to zero. Smartphones, large appliances, electronics, and fashion are the main drivers of gross sales for electronic retailers, accounting for 60-70% of the total. These data points are undoubtedly based on current circumstances and may evolve further, for better or for worse, depending on how India handles the pandemic.
“If they (online retailers) can grow 5% this year, they should feel lucky. Even after the close is over, consumer spending will suffer. Even with EMI exemptions, people will carry a lot of their expenses next year, said Satish Meena, forecasting analyst at Forrester. According to Meena, retail sales in China fell 21% in the past two months and e-commerce sales grew just 3%, but supermarkets are a large part of online sales in the country, unlike India.
Investors who follow the space feel that the April to June quarter could be a disaster for the sector. Some e-commerce executives said electronics and other items would also have to be allowed deliveries if the blockade lasts longer than April 14, as the grocery segment alone is not sustainable in terms of margins. Some industry-focused e-retailers, such as fashion website Myntra and baby care product vendor FirstCry, have stopped accepting new orders. Others, like beauty product vendor Purplle and furniture vendor Pepperfry are taking new orders, but offering deliveries only after April 15.
Even before the outbreak of, overall consumer spending declined due to broader economic challenges. But the virus that spread at this rate stopped. Last year, 140 million Indians shopped online at least once, according to Forrester. This may not grow significantly in 2020 even though online grocery and drug delivery platforms are seeing new customers sign up.
“During a meeting for 2020 projections at the end of 2019, leadership team was told about economic and policy challenges in India, which might be a hindrance to growth. The mandate was to grow despite those issues. But now, with, it looks virtually impossible, ”an Amazon executive recently told TOI when the number of confirmed cases started to rise in India. Flipkart and Amazon India spokespersons declined to comment.
Investors said the next few months will be difficult for business and there will be a slowdown in discretionary spending even after a potential recovery. But the development could increase the penetration of online shopping, such as in supermarkets, which have so far remained offline. There will be some permanent behavioral change in consumers due to the coronavirus and they will come back after getting used to shopping online, especially for the must-have categories, said T C M Sundaram, MD of venture capital firm Chiratae Ventures.