Looking at the full pages ads in leading newspapers and the ad spots crowding the GECs, it may seem e-commerce players are spending a fortune on marketing their annual sale events such as Big Billion Days (Flipkart) and Great Indian Festival (Amazon).
But these players are also making a fortune this season. Major e-commerce players are expecting to rake in as much as 50 per cent of their annual sales during the festive season that started with Ganesh Chaturthi and will go on till the end of the year.Â
While major players such as Amazon and Flipkart are spending nearly Rs 100 crore to market their annual sale, the return on investment or ROI for these players around this time of the year is also high.
Harneet Singh, Head, Marketing, ShopClues, said that they are seeing a spike in sales during this time of the year and hence around 35 per cent of their marketing spend is earmarked for this period.
â€śWe typically see a good growth, which is 50 per cent plus from the running rate during the festival season. The marketing investment during September and October is about 30-35 per cent because it generates a much higher return on investment. We are seeing a 50-70 per cent increase in sales during Diwali season this year,â€ť said Singh.
According to Singh, the fashion category is seeing the maximum sales on ShopClues.Â
Flipkartâ€™s Big Billion Days sold 1.3 million smartphones within the first 20 hours of the category opening for sale. Amazon, on the other hand, saw an accelerated growth of 150 per cent in smartphones over last Diwali on the first of their sale.Â
According to reports, Indiaâ€™s e-commerce biggies are likely to sell over Rs 10,880 crore worth of goods during this festive sale which is expected to revive the retail market.
Amazon, who refused to comment on their marketing and sales numbers, said that their top priority was to reach out to new customers and getting them online.
â€śWe have partnered with hundreds of leading brands, offering our customers an overall selection of over 160 million products, enabled over 225,000 sellers and expanded fulfilment footprint with 41 fulfilment centres in 13 states offering a storage capacity of 13 million cubic feet, launched 13 customer service sites across 12 cities and developed over 6000 Udaan points in 21 states,â€ť said Manish Tiwary, VP, Category Management, Amazon India.
Swati Bhargava, Co-founder, CashKaro.com, said that they are witnessing increased sales from tier II to tier IV cities. In fact, Amazon is looking to penetrate further into tier III and tier IV locations in India with its own delivery services.
â€śOn CashKaro, we have seen a good 200 per cent increase in transfer that is coming from tier II to tier IV cities. Some cities like Rohtak saw around 250 per cent increase, Kochi had a 120 per cent increase, Chandigarh saw a 91 per cent increase. So a lot of emerging cities have bigger contribution when it comes to sales,â€ť said Bhargava.
Aside from the high ROI during the festive season, the e-commerce players are looking to rake in the big bucks through advertising. Advertisers intending to advertise on platforms such as Amazon and Flipkart during this time, when they see a lot of traction, will have to shell out at least twice as much as they did last year. With both Amazon and Flipkart counting more than 1,000 advertisers, the numbers are bound to be high.
Speaking about how much the festive season contributes to the advertising industry, Ashish Bhasin, Chairman and Chief Executive, Dentsu Aegis Network South Asia, said, â€śIn general, if you look at it from an advertising industry point of view, almost 40 per cent of the spend happens between Ganesh Chaturthi and New Year.â€ť
Not only is the market seeing a marketing blitz by e-commerce players but the overall media spends by brands is also expected to go up by 15 to 20 per cent as compared to last year.
While there was a slump owing to demonetisation last year and then with GST earlier this year, the festive season is expected to bring a change in the market sentiment.
â€śThe market sentiment is definitely improving. We had a low November and December last year because of demonetisation. January onwards things started improving a bit and by April the impact of demonetisation was over but by June, July GST happened. This festive season therefore becomes very important. So far, the sings are good but not spectacular. If this festive season goes well then that should bring things back to normal,â€ť said Bhasin.