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Amazon and Flipkart pin their hopes on festive season sale to revive businesses and shed overstock

According to a Nielsen report, 43% of offline sellers said the main reason for merchants to participate in an online sale event is a prospect to revive their businesses.

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Indian e-commerce majors, Amazon and Walmart-owned Flipkart are set to kick-off their sale events tomorrow offering severe discounts ranging from 20% to 80% in categories including home appliances, electronics, and fashion. This year’s promotional sales have a special meaning for merchants participating in the event as they look to shed their overstock as a result of the nationwide lockdown.

While Amazon India is hosting its ‘Prime Day’ sale event for two days, Flipkart’s ‘Big Saving Days’ will continue for five days from August 6 to 10. This is their first promotional event after the lockdown was partially lifted in May.

“Prime Day is back again this year offering a unique opportunity for our members, to discover joy with a two-day event (Aug 6,7)  filled with best of deals, hundreds of new product launches, blockbuster entertainment and more, all from the safety of their homes,” Amit Agarwal, senior vice president & country manager, Amazon India, said in a statement.

It is to be noted that the moratorium period granted by the Indian government to sellers for their working capital loans ends this month. Online sales are expected to help the merchants to get rid of their existing inventory and get prepared for the upcoming mega sales by the end of the year. According to a Nielsen report, 43% of offline sellers said the main reason for merchants to participate in an online sale event is a revival of the business.

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While e-commerce platforms have been able to clock the GMV (gross merchandise value) numbers they were seeing before the lockdown, but it is largely in the grocery and personal care category. Sale of non-discretionary products like electronics, apparel, and white goods still remains a worry for online marketplaces.

The sale events are also a way for Flipkart and Amazon to test the water ahead of their marquee festive season sale that starts in October and goes on till the end of the year in various stages. Ideally, Indians go on a shopping spree during this period due to half a dozen local festivals from October to December, a period which e-commerce companies have been traditionally using to spurt their sales.

However, mass layoffs and pay cuts across the sector coupled with the negative economy growth is expected to dull the shopping activity in the country. This would be a good test for e-commerce companies to gauge whether they need to tone down their sale efforts in the coming months.

With people reluctant to go out in crowded places like shopping malls or a market area, online shopping is going to be their best bet this year. Moreover, analysts believe the pent-up demand will help e-commerce marketplaces and merchants.

Earlier in June, Flipkart’s fashion arm Myntra held a four-day-long sales event ‘End of Reason Sale’. It claimed 3.5 million shoppers bought over 10 million products during the sale. Of these, it said more than 700,000 buyers were first time online shoppers.