Home Industry News E-comm sales volumes back at pre-Covid-19 levels

E-comm sales volumes back at pre-Covid-19 levels

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Source: ET Bureau

​​​Following the unlocking of the economy, online commerce companies had projected a temporary surge in sales due to pent-up demand.

India’s ecommerce industry has recovered about 90% of its overall order volumes since restrictions on shipping of non-essential products were relaxed in early May, according to industry estimates.

The total value of items sold online, however, remains low as consumers continue to avoid large-ticket purchases in the wake of economic uncertainty occasioned by the ongoing pandemic.

The volume jump in recent weeks was led by the significant uptick in sales of electronics, according to data from Unicommerce, a technology solutions provider for the ecommerce industry. This includes items such as phone and computer accessories, trimmers and Wi-Fi routers, which grew 145% compared to sales before the Covid-19 induced nationwide lockdown.

“Order volumes have fluctuated between 79% and 88% over the past few weeks, but GMV (gross merchandise value) recovery is obviously lower,” said a senior executive at one of India’s leading ecommerce marketplaces. “Our recovery is still far better than any of our offline peers which are struggling to get people into stores,” the person said, corroborating the data.

A representative for online marketplace Snapdeal said that the overall sales volumes were now similar to pre-Covid levels. “The recovery in order volumes has been faster in smaller towns likely due to limited availability of products in offline stores due to supply chain disruptions,” the person said.

Categories like home and apparel are back to pre-Covid-19 levels. New categories relating to personal safety and health are driving sustained volumes,” added the Snapdeal spokesperson.

Flipkart and Amazon did not respond to ET’s queries for comment until press time.

“Ecommerce has shown a recovery that’s much faster than anyone had anticipated…. the fear of (shopping) offline still continues,” said Kapil Makhija, CEO of Unicommerce.

The software-as-a-service-based platform does not work directly with marketplaces such as Amazon and Flipkart but provides tools to online sellers, brands and even offline retailers looking to sell online through various platforms and their own websites. It claims a fifth of all orders sold online in the country are processed on its platform.

“It’s been 45 days of strong growth and the upward trajectory is continuing, which signifies a fundamental shift in how consumers are shopping,” Makhija said. The uptrend does not include growth in sales of smartphones, which accounts for over 40% GMV of ecommerce platforms in India.

Flipkart, Amazon and Snapdeal have earlier told ET that work-from-home essentials, personal care devices and fashion products are selling fast after lockdown restrictions were removed in May.

Fashion sales, which was expected to suffer due to low recovery rates, has bounced back to around 70% of pre-pandemic levels, but cart values are 25% less than before the outbreak, Unicommerce data showed. Kids apparel is driving growth, and it has jumped 100% since early June compared to sales volumes prior to the pandemic.

Last week, Falguni Nayar, CEO of beauty and wellness company Nykaa, said, “For ecommerce, we came out at about 20% of the business as usual in April, and about 65% of the business as usual in May, and for June, we should record upwards of 85%..We are hoping that the same momentum continues and hope to get the full business back by July.”

Following the unlocking of the economy, online commerce companies had projected a temporary surge in sales due to pent-up demand. While sales had recovered to around 80% of pre-Covid-19 levels in the first three weeks, industry executives at leading marketplaces had been unsure how long the upsurge would last.

However, demand has remained consistent over the past seven weeks, according to Unicommerce. Direct-to-consumer brands, examples of which include Dollar Shave Club, Casper Mattress have seen sales recover 25% faster than traditional brands which sell online only through marketplaces.

Ankur Pahwa, the national leader for the E-commerce and Consumer Internet sector at EY, agreed that while online volumes were recovering, the value of goods sold was far lower than pre-Covid levels. This was largely due to consumers cutting back on spending and also an increasing share of first-time buyers on online platforms, who were experimenting with small-ticket purchases.

“High ticket value items such as large appliances, furniture is not doing well at all. They’re only slowly starting to (be sold) again but the volumes are extremely low,” Pahwa said. “In fast moving categories, there’s substitution which is happening where people are moving from higher value items to lower cost equivalents.”

The online fashion category is expected to gain momentum on specific sale events by etailers like Myntra and others later this month. The fast recovery of online sales comes at a time when offline sale of fashion brands is about 30-40%, Unicommerce said.

“Brands tell us that the offline channel is barely recovering; even if footfalls are there, transactions are not happening. Much of their demand has shifted to online, which has broadly returned to pre-Covid-19 levels,” Makhija added.

In the electronics category, products such as USB cables, extension cords, trimmers and Wi-Fi routers are driving sales and the average cart size has decreased by a much smaller 5-10% compared to levels seen before the outbreak. Although work-from-home is pushing the need for such products, consumers are choosing value options, according to Unicommerce.

In the eyewear and beauty segment category, sales volumes have recovered by 70% and 60%, respectively. Unlike other segments where the value recovery has been lower than volume recovery, cart sizes in these categories have remained consistent from prior to the pandemic.

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