E-commerce giants are investing in infrastructure ahead of the festive shopping season in India

Print

Email

The Indian festive shopping season has been one of the largest growth drivers for e-commerce players over the last two years and the trend is expected to further continue in 2022. As consumer demand rises across product categories, firms are anticipating significant growth in sales in H2 2022. Consequently, e-commerce giants such as Amazon and Flipkart have been investing heavily in their infrastructure to cater to the growing sales volume projected during the upcoming festive shopping season in India. For instance,

• In the run-up to the festival season in the country, Amazon has announced the expansion of its fulfillment center network. Notably, the firm has increased its storage capacity by 40%. Currently, Amazon has more than 60 fulfillment and sortation centers along with 1,850 plus partner stations. Furthermore, to meet the demand during the festive season, the firm is also ramping up its workforce. Notably, it had further bolstered its partnership with Indian Railways for the smooth movement of customer packages.
• On the other hand, Flipkart, the e-commerce giant owned by Walmart, has expanded its hyperlocal network for delivering products with over 200,000 Kirana delivery partners in India. Like Amazon, the firm has also partnered with Indian Railways to ensure smoother movement of customer packages, while also utilizing the partnership for branding and other activities. Flipkart, like Amazon, is also strengthening its workforce to cater to the expected surge in online orders during the festive season.
• Meesho, another homegrown e-commerce platform, has been also ramping up logistics and warehousing ahead of the festive season in the country.

To tap into the high growth opportunity during the Indian festival season, these players are adopting different growth strategies such as increasing the number of sellers on their platforms. For instance,

• More than 1.1 million businesses, including those on the Shopsy social commerce platform, are expected to participate in the Flipkart festive season sale. Meesho has also announced that the firm is expanding its seller base ahead of the festive season sale in the country.
• Amazon, on the other hand, is offering lucrative incentives to new sellers to drive growth in its seller base. The firm announced a waiver of 50% on the selling fee for new vendors that joins the platform between August 28 to October 26 and launches within 90 days of registration. The fee waiver is applicable for products across different categories.

The strategy to bring more sellers onto their platform is part of their plan to offer more product choices to online shoppers in the country, which will subsequently drive their order volumes and revenue growth. Notably, to get more consumers shopping during the upcoming festival season, these firms are also projected to increase their advertisement expenditure in H2 2022. Furthermore, these firms are also offering impressive discounts, ranging from 50% to 80% to draw more interest from consumers in the country.

Besides the heavy discounts, these players are also forging alliances with banking institutions to offer additional discounts on card payments, no-cost EMI facilities, and BNPL services. Flipkart also entered into a strategic collaboration with Google Pay to attract more buyers. While Flipkart has teamed up with celebrities for endorsements to attract more shoppers, Amazon is looking at influencers and social media marketing to drive sales volume during the 2022 festive season in India.

Some of the top categories where consumers are expected to make increasing purchases include consumer electronics, fashion, and apparel. Notably, the demand for high-end smartphones has been increasing among consumers in Tier II and III cities. Consequently, PayNXT360 expects smartphones to drive up the gross merchandise value for e-commerce platforms in H2 2022.

E-commerce giants such as Amazon and Flipkart are expected to face stiff competition from other emerging players such as Meesho, Nykaa, Tata Neu, and Jio. However, they will also have to contend with brick-and-mortar retailers, who are projected to make a greater push for higher sales in H2 2022. Notably, this is the first time since the global pandemic outbreak that offline retailers will be able to run their businesses at full scale, which means higher competition for e-commerce marketplaces.

While both Amazon and Flipkart have invested significantly to capitalize on the 2022 festive season, these firms have been under government scrutiny for allowing fake reviews and favoring their own sellers. While the Indian government might tighten regulations for norms violation from the short to medium-term perspective, these players are projecting big sales volume during the Indian festival season. 

To know more and gain a deeper understanding of the B2C E-Commerce market in India, click here.