2023 festive month eTailing sales to surge 18-20% to Rs 90,000 crore: Redseer

E-commerce retailers are expected to garner sales worth Rs 90,000 crore this festive season, 18-20 % higher than last year, according to a report by Redseer Strategy Consultants.

“Pre-COVID, the YOY growth rates of nominal Private Final Consumption Expenditure (PFCE) used to be around 8-9%. However, due to continuous external shocks like COVID- 19 and the Russia-Ukraine conflict, there was significant flux in the market. And in the last couple of quarters of FY23, there was material consumption slowdown due to tightening liquidity conditions,” the report by Redseer said.

“However, the YOY growth for PFCE has bounced back to 9% and several stabilising factors are kicking- in. For instance, interest rates are maxing out, countries aiming to resolve the Russia Ukraine conflict, and the Indian economic growth numbers are coming in strong. So, there are meaningful tailwinds to support a relatively strong festive period this year,” the report added.

The first ever Indian online festive season sales happened in 2014. As such, this year’s sales is the 10th year of the festive season sales. Over these 10 years, the Indian e-commerce market has grown almost 20 times — from a gross merchandise value (GMV) of Rs 27,000 crores in the whole year in 2014 to an expected level of approx. Rs 5,25,000 crores in 2023.

Further, this year’s festive season will see increasing contribution from higher margin categories like Beauty and Personal Care (BPC), Home and General Merchandise, Fashion etc. Also, there will is persistent premiumisation leading to rising Average Selling Prices (ASP) and increasing ads and promotion revenues will possibly make this year’s festive season the most efficient from a margin perspective.

Mrigank Gutgutia, Partner, Redseer Strategy Consultants, said, “Over the last several quarters, we are seeing enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification. his is good for the ecosystem as it shows consumers’ willingness to purchase multiple categories online and more brands coming to cater to their needs. Continuing with this trend, we expect increasing GMV contributions from non-electronics categories like Fashion, BPC, Home and General Merchandise and more this festive period”.

Beyond category diversification, we expect multiple other sub-themes to play out. For example, D2C brands being more prominent this festive season. Projecting these to the long term, we expect D2C brands to grow 1.6x as fast as the broader eTailing market (CAGR 2022-27).

“In terms of city-tier wise growth, metros have been growing faster than the Tier 1 and Tier 2+ in the last few quarters (10%+ for metros vs ~8% for other city tiers. However, we expect robust growth across city tiers this festive season,” the statement further added.

Additionally, new-age technology solutions like generative AI being more widely adopted in multiple use-cases during the sale period will also lead to better and novel consumer experiences and drive stronger growth momentum, as per Redseer.

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