According to market research data, ecommerce sales experienced a modest growth of 12-15% in the initial quarter of this year, marking a decline from the 20% growth rate recorded in the corresponding period of the previous year. Industry executives and analysts observe that the softening demand is evident in reduced sales volumes, despite the contribution of higher-cost items towards the overall value generation.
Nonetheless, a senior ecommerce executive mentioned that the month-on-month sales trajectory is showing signs of improvement over the same period. Optimistic observers anticipate more favorable results in the upcoming financial year, as the onset of summer is expected to stimulate demand in specific categories.
“Typically, January to March constitutes a sluggish phase for ecommerce enterprises, and while January was challenging, we’ve witnessed a resurgence in growth over the past three weeks,” remarked Satish Meena, advisor at Datum Intelligence. He anticipates a potential return to a growth rate of around 20% by April.
The beginning of the calendar year is also the time when the fashion and peripheral segments typically clear out their older inventory.
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It’s worth noting that no significant smartphone devices, which are a cornerstone of online retail, have been launched so far this year.
A senior executive from one of the top three ecommerce logistics firms mentioned that growth this year has been subdued, but there are expectations for an uptick starting from April. “The rate of growth will depend on the sheer number of shipments,” they said.
Online retailers experienced a weak end to the previous year following a period of robust growth during the festive season sales, spanning from late September until Diwali.
Meena from Datum highlighted stagnant growth in smartphone sales across both online and offline channels, noting a slight decline in shipments but sustained high average selling prices (ASP).
Meena remarked, “The ‘fear of missing out’ phenomenon previously associated with online exclusives in smartphone sales has diminished. Additionally, offline stores have improved their financing options, and discounts are no longer as steep, resulting in offline channels capturing a larger market share, accounting for 52% of sales in the calendar year 2023.”
Market research data from Counterpoint Research indicates that smartphone sales in India remained stagnant in 2023, with overall sales plateauing at 152 million units.
Meanwhile, in apparel sales, end-of-season clearance events indicated signs of improvement.
Earlier reports indicate that brands across various sectors are experiencing growing interest in premium products, whereas mass-market products, despite their lower prices, are not seeing comparable growth.
According to individuals familiar with sales data, the surge in inflation has contributed significantly to the decline in online retail performance. A parallel trend has been observed in the fast-moving goods category on quick commerce platforms.
Flipkart, Amazon India, Meesho, Tata Neu, and Reliance’s JioMart are some of the top e-commerce platforms, with Flipkart and Amazon India dominating the majority of the market share.
It’s interesting to note that, in an otherwise sluggish e-commerce sector, cosmetics firms that were founded online are expanding rapidly. Their growth has exceeded 25%, primarily due to the impact of winter sales and promotional activities.
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According to Kaushik Mukherjee, co-founder and chief operating officer of Sugar Cosmetics, the segment experienced robust sales in January and February, partially boosted by Valentine’s Day gifting.
“With the cold weather fading, we also see a shift from products like moisturisers, and sunscreen and facewash coming back strong (sic),” he added. “There definitely is a little bit of weakening in sales post Valentine’s Day.”
In January, Nykaa announced that its beauty and personal care business grew faster than the industry growth rate.
Brands and sellers in various categories including wearables, hearables, beauty, fitness, and home furnishings reported a mixed pattern in their online sales during the first quarter. This variance depended on factors such as price points and sub-categories.
They project a year-on-year sales growth of approximately 15-18% in home furnishing and 10-15% in audio wearables. The health and fitness category, encompassing supplements and gym equipment, is expected to conclude the quarter with a 15-20% increase.
Audio product manufacturers like Noise and Boult have reported growth of over 15% compared to business-as-usual days before the festive season.
“Our sales have increased by more than 15%, but less than 20%, depending on pricing and product type, compared to the period before the festive sales started,” said Tarun Gupta, co-founder of Boult.
Gaurav Khatri, co-founder and CEO of Noise, mentioned a decline in sales following the festive period. During this time, the company utilized other sales channels such as offline stores and quick commerce to maintain growth.He added, “We are shifting our attention from simply boosting unit sales to strategies like promoting premium goods and cultivating customer loyalty during this period.”
Pallav Bihani, founder of supplements and equipment manufacturer Boldfit, mentioned that the segment has experienced a rise in sales driven by a post-festive focus on health and fitness. He stated, “We typically don’t see a significant boost from festive sales since that’s not when customers are primarily thinking about fitness. We anticipate another surge from April to June, as a younger, health-conscious demographic takes their summer breaks.”
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