In India, Navaratri marks the beginning of the festive season. After the nine days of Navaratri, the Dussehra festival is celebrated. Diwali, one of the most important Indian festivals, is celebrated 20 days after Dussehra. The dates change every year, per the Hindu calendar. In 2021, Navaratri will begin on October 7. Dusshera will fall on October 15, and Diwali will be celebrated on November 4. During this month-long festive season, retailers and brands offer heavy discounts and attractive offers on their products. Indian consumers wait for the festive season to make their major purchases.
For the past several years, Amazon and Flipkart have run online sale events during the festive season. This year, Flipkart will run its Big Billion Days (BBD) event from October 3 to October 10. Amazon Great Indian Festival (GIF) will also start on October 3. Both companies preponed their event dates, indicating a strong competition between them to reach out to online shoppers first during this hugely important selling period.
As the 2021 festive season in India gets underway, we see that:
- Online retail sales will see strong growth — driven by consumers in tier-two and tier-three cities. Forrester expects online retailers in India to generate about $9.2 billion in sales during the 2021 festive month, up 42% year over year from our estimate of $6.5 billion in festive month sales during 2020. In just the first week (October 3 to 10), we estimate that $6.4 billion of online sales, about 70% of the festive month total online sales, will happen. A big change: pre-pandemic, most of the market growth was driven by buyers from the metro and tier-one cities. Now, users from tier-two and tier-three cities are also contributing significantly to the market growth. Around 75 million online buyers will participate during this festive season, of which 50 million will come from tier-two cities and beyond.
- Buyers are more comfortable now with online shopping. Forrester is optimistic about online channels doing well during this holiday season. The COVID-19 pandemic benefited the Indian e-commerce industry by removing several inhibitions of online buyers. There has been a faster adoption of digital payments. Buyer trust in online retailers for their order deliveries has increased. Buyers prefer online shopping because it is safer, saves time, and is easier than going to online stores. There has been wider adoption of nonstandard categories such as grocery, apparel, and general merchandise. All these changes are sticky. We believe that India’s e-commerce market growth will be healthy in the future.
- Smartphones remain the largest category; grocery is growing fastest. Forrester expects strong growth in the smartphones, consumer electronics, and large appliances categories. Consumers typically wait for the festive season to upgrade their devices to coincide with new product launches in India. Themed around price sensitivity, we expect new launches to drive volume in both the smartphone and appliances categories. Pent-up demand and new consumers from tier-two cities and beyond will also drive the growth. Grocery will emerge as the fastest-growing category, as most of the festive-themed categories within grocery move online, aided by the increase in basket size during this period. Fashion, the third-largest category, is expected to do better compared with last year. With the economy reopening, occasion-based clothing shopping is coming back.
- Online marketplaces are gearing up for a festival bonanza. Online marketplaces are making big investments to ramp up their workforce, infrastructure, and seller base across metropolitan areas and lower-tier cities to drive overall fulfillment. Amazon is hiring 110,000 seasonal workers to meet anticipated demand this festival season. In their logistics network, Amazon has close to 60 fulfillment centers across the 15 states, and its warehousing capacity is 40% more than last year. Flipkart has almost doubled its storage, fulfillment, and supply chain capacities ahead of the festive season. Flipkart has added 75,000 new sellers on its platform over the last few months, taking the total number of sellers to 375,000. Attractive festive deals and product discounting along with flexible payment options will boost affordability for consumers, making it another successful festive-year period for online retailers in India.
- Flipkart will play on its lead in the smartphone and fashion categories; Amazon will rely on Prime members. Since its launch in 2014, Flipkart has led spending during the festive month due to its strength in the smartphone and fashion categories, which account for over 50% of total online retail sales in India. Meanwhile, Amazon is focusing on its Prime members to buy in more categories and buy more frequently during this month. During festive month 2021, smartphones and fashion will account for 50% of total sales, allowing Flipkart to maintain the lead.
We recently published our online retail forecast for the Asia Pacific region. The forecast details online and offline growth for 10 product categories across five countries in Asia Pacific — Australia, China, India, Japan, and South Korea. Forrester clients can access our Asia Pacific online retail forecast here. A separate forecast covers six Southeast Asian markets: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Forrester clients can access our Southeast Asia online retail forecast here.