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E-commerce firms in India Could reach $1.8 billion

Update On :20 October 2016

E-commerce firms in India Could reach $1.8 billion

Gross sales at domestic e-commerce companies in October could touch $1.5-1.8 billion, driven by a spurt in sales during the upcoming festive season, according to a report by RedSeer Consulting, a research and consulting firm.

The country’s largest e-commerce companies—Flipkart Ltd, Snapdeal (Jasper Infotech Pvt. Ltd) and Amazon Ltd (Amazon Seller Services Pvt. Ltd)—are gearing up for festive sales in October.

Flipkart and Snapdeal have announced the Big Billion Day and Unbox Diwali sales respectively from 2-6 October, while Amazon will host the Great Indian Festival from 1- 5 October.

Amazon India has the momentum and superior spending power going into the festival sales period during which e-commerce firms typically generate a majority of their annual sales as customers spend freely on a host of products.

Amazon overtook Flipkart on a standalone basis in terms of gross sales in the months of July and August, Mint reported on 12 September.

According to RedSeer, during the festive sales last year, daily gross sales at e-commerce companies increased four times to $144 million driven by a jump in average order value, from $33 on an usual business day to $48 during the festive season.

While last year’s blockbuster sales were driven by heavy discounts and aggressive advertising by the e-commerce companies, 2016 is expected to be a different scenario, after the Centre practically outlawed discounting by e-tailers in March.

According to RedSeer, e-commerce companies this year will offer limited discounts, but prioritize high demand product categories, identifying high quality customer segments and attract them with targeted marketing.

With the new directives from the Department of Industrial Policy and Promotion (DIPP) of capping total sales originating from a group company or one vendor at 25%, India’s fundamentally strong e-tailer market could not foray into aggressive discount schemes. With this festive season, I foresee a spring effect of targeted marketing & focus on quality customer segments,” Anil Kumar, chief executive at RedSeer, said in a statement on Friday.

The stakes have, arguably, never been higher for Flipkart, which also owns the fashion retailers Myntra and Jabong.

This Diwali could prove to be a make or break quarter for Indian e-commerce sector’s poster boy. If Flipkart has a successful Big Billion Day sale, it may get the platform to keep improving its results and raise a fresh round of funds. If Amazon comes out as a big winner then it may force a shakeout in the e-commerce business.

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