Online Festive Sales: Decreased Average Order Values and Increased EMI Purchases

MUMBAI: India’s online festive sales are experiencing a lackluster performance this year, primarily due to price hikes affecting smartphone sales, which are typically a major driver of the season. Many final prices remain higher than last year, even after discounts. This trend has also impacted the sales of durable goods, with a notable increase in the share of large-ticket purchases made through EMIs. According to Aman Deep Lohan, director of home, kitchen, and outdoors at Amazon India, purchases using no-cost EMIs have surged to 50% from about 30% last year.

As inflation continues to tighten household budgets, consumers are gravitating towards smaller-ticket items, prioritizing value for money. The average order values (AOV) have decreased, with growth being led by categories such as fashion, beauty, home, and general merchandise. Nikhil Dalal, associate partner at Redseer Strategy Consultants, noted that value commerce, which includes items priced below Rs 500, accounted for about half of all festive orders. AOVs are reported to be 7-8% lower than last year, as consumers shift their focus to lower-ticket categories.

Sales Trends and Consumer Behavior

Unlike previous years, when a significant portion of sales occurred during Navaratri, analysts predict that this year’s sales will be more evenly distributed throughout Diwali. Consumers are balancing their spending with their financial capabilities. Estimates from Datum Intelligence indicate that sales dropped by approximately 7-10% during the first four days, totaling between Rs 29,800-30,900 crore. Analysts pointed out that last year’s sales began on September 22, coinciding with GST rate cuts, while this year lacked a similar catalyst.

Discounts and Financing Options

As discounts shrink due to price increases, particularly in high-demand categories like smartphones, consumers are opting for larger EMIs to purchase premium products. Phones entered the sale with average prices about 15% higher than last year, resulting in final prices that remain above last year’s festive levels. Sale-day prices were only 5% to 10% lower than pre-sale levels, depending on the category. Discounts were more substantial in areas where inventory and competition allowed, such as smartwatches and budget phones, which saw reductions of 10-15%. Lohan noted that consumers are using EMIs for significant purchases like 55-inch televisions and premium laptops.

Rise of Small Town Shoppers

The expansion of internet access and smartphone usage is driving more consumers from small towns to online shopping. E-commerce platforms are increasingly offering a wider range of brands, attracting these shoppers. On Flipkart, consumers from towns like Sardulgarh, Panskura, and Kishanganj are among the fastest-growing markets at the start of the sale. Approximately 60-65% of orders on Amazon originated from tier 2 and 3 markets.

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