Amazon vs Flipkart vs Snapdeal: Who won the festive sales war?

The festival season, which is considered the most significant period for Indian e-commerce companies in terms of sales generated, has recently concluded with Flipkart, Amazon, and Snapdeal, the three biggest e-commerce websites in the country claiming major gains.

All three say that this year’s sale was the biggest so far and all of them have claimed to achieve a major milestone in some way or the other.

As per industry estimates, just one day of festive sales generate anywhere between $300-400 million (about Rs 2,000-3,000 crore) in orders for the e-commerce players.

While the gross sales number achieved by three of them during last month’s sales season is still unknown, this year proved to be different in terms of many firsts.

Where holding ‘multiple’ sales event in itself was an industry first, here’s a list of major trends indicating a significant evolution in consumer behaviour: 

Discounts or No Discounts, Consumers Will Shop Online

The Department of Industrial Policy and Promotion (DIPP) in April this year prohibited marketplaces from offering discounts and capped total sales originating from a group company or one vendor at 25 per cent. The guidelines stated that marketplaces cannot influence pricing. They also said that e-commerce entities with marketplace model shouldn’t directly or indirectly influence the sale price of goods or services in order to maintain a level playing field.
As a result, there were whispers in the industry that online players – failing to offer any discounts on their products – could prompt customers to hold back spending. However, just ahead of the start of the sale season, e-commerce players wooed vendors with special incentives, providing attractive discounts.

Due to this, despite less discounts and offers this year, consumers thronged to e-commerce websites to buy products, helping online retail entities log record sales.

Where home-grown major Flipkart sold 15.5 million units and raked in sales of about Rs 3,000 crore during the first leg of the Big Billion Days sale (October 1 –5). 
Read: Flipkart races past Amazon, sells 15.5 million units
Amazon said that it sold 15 million units during the first leg of its Great Indian Festival sale (October 1 -5). 
Snapdeal on the other hand lagged behind its rivals and processed transactions for over 11 million units during its Unbox Diwali Sale (October 2-6 sale).

At the end of the three waves of sales, Amazon India said it sold nearly three times more products this October than in the same festival month last year and it has experienced the biggest ever festive season since launch in the country over three years back.

The numbers clearly signify that consumers are slowly but gradually proceeding towards an e-future where online shopping is not just about price but also about convenience, products and options available.

Consumers Like Exclusivity

In order to grab the bigger share of the e-commerce pie this Diwali, e-tailers left no stone unturned to lure customers on their portals. Where Amazon launched exclusive products through tie-ups with top appliance brands, Flipkart forged partnerships with various electronics brands and Snapdeal on its part joined hands exclusively with Nestle to launch premium chocolate packs.   
Read: Vendors, not consumers, are centre of e-commerce strategy this festive season

For e-commerce companies, electronic goods form 70 per cent of gross sales, and within this category, smartphones are the leaders followed by TVs, according to a market researcher RedSeer Management Consulting. This explains why e-commerce companies struck exclusive electronic goods deals for customers.

Flipkart, which made its platform available exclusively for US tech giant Apple to sell the latest edition of iPhone along with Samsung’s Galaxy One 8, Motorola’s E3 Power and Xiaomi’s Redmi 3S had some killer deals during the festive season. The company said that consumers thronged its website to buy mobile phones and it sold more smartphones during the first five days of sales (Oct 1 – 5) as compared to the entire sales of mobile phones in India in a week.

In Pics: When Flipkart top bosses turned ‘delivery boys’

Similarly, Amazon struck exclusive deals with Lenovo Z2 Plus, Lenovo Vibe K5 and OnePlus 3 also managed to rake in a majority of shoppers for electronics purchase.

While its unclear who won the exclusivity game, a research by Ugam – a firm that provides market research, analytics, and online marketing services for e-tailers and comparison shopping engines –  said that Amazon offered 70 per cent of the most preferred smartphones in exclusive deals on mobile phones and thus was far ahead of its nearest competitor, Flipkart.

Read: No bumper discounts this festive season: Ebay India

As per analysis, what is interesting is that almost half of the top exclusive smartphones on Flipkart were also available on Amazon. This includes Lenovo K3 Note, LeEco Le 2, and the Lenovo Vibe K5. However, Flipkart was priced lower than Amazon was for two out of those three smartphones, Ugam said.

COD is Passe, Consumers Like Prepaid Option

It’s an established fact that the Cash on Delivery (COD) option is a necessary evil for e-commerce majors in India. While COD certainly extends convenience to consumers, it has remained a major pain point for both marketplaces and merchants in terms of additional liability. 

However, during this year’s sales – thanks to lucrative offers extended by e-tailers on paying via debit/credit cards – COD was not the preferred medium for consumers.

Read: New e-commerce trends emerge from Snapdeal’s Unbox Diwali Sale

Home-grown major Snapdeal was the first to spot this trend. The company – which partnered with eight leading banks this Diwali including with American Express, Axis Bank, Citi Bank, HDFC Bank, Kotak Bank, Standard Chartered Bank, State Bank of India and Yes Bank – said that there was sharp increase in willingness of customers across India to pay at the time of making the purchase instead of opting for COD. This was in part driven by additional instant discounts ranging from 10-25 per cent that were available every day of the month, over and above the huge festive discounts.

Flipkart’s co-founder & CEO Binny Bansal said the average order size was up 20 per cent compared to regular days. Flipkart also claimed it brought in 1.5 million new customers this year versus one million that came on board last year even as COD orders came down from 70 per cent to 60 per cent of all Big Billion Day transactions.

Amazon India offered an additional 15 per cent cashback for customers using SBI Bank’s debit and credit cards. And Flipkart offered additional 15 per cent cashback when using Citi and HDFC Credit and Debit cards.

“Exclusive privileges and financial benefits being offered by portals like Flipkart, Amazon.in, Snapdeal, and Shopclues are backed by additional discounts through strategic partnerships with various banks like HDFC, SBI, ICICI Bank, Standard Chartered, American Express etc. These partnerships have played a pivotal role in increasing sales and order value this festive season,” Founder of CashKaro.com, Swati Bhargava, told Indiaretailing.com.

The decline in COD shows that more Indians now trust online platforms to deliver the goods.

Small-Town India Goes Big Online

The dreams of Indian e-commerce majors to march into smaller cities finally seemed to be making progress this year after many attempts to amp up business from these towns. 
“Historically, small town consumers have been value conscious but online sales events – coupled with various cashback offers – have encouraged people to shop online. While last year metro cities vs small town participation ratio was 70:30, this year it went up to 60:40,” Bhargava said.
“Also until last year, categories like mobile phones and electronics were doing well in these towns but this year, fashion has also picked up well signaling a trend towards aspirational shopping in these towns,” she added.

E-tailers back this statement. Amazon India said among that the 15 million units it sold during the first leg of the Great Indian Festival, orders came from 90 per cent of India’s pin codes. The number of new customers increased five-fold over last Diwali with 70 per cent of new shoppers coming from tier II and tier III towns. Overall, 65 per cent of Amazon’s orders come from towns categorized as tier II (population of one million) and below.

Read: Small towns driving huge festive season gains, claim e-tailers

Rival Flipkart says sales from tier II and below cities went up to 42 per cent from 34 per cent in the past one year.

Snapdeal too saw a significant jump in the orders from the small towns. The company said that the traffic from tier II and III cities increased by 20 times, with maximum surge, other than metros, coming from Mizoram, Meghalaya, Goa, Himachal Pradesh and Jammu & Kashmir in that order.

E-commerce war is Alive, Kicking and On-the-face!
Such was the intensity of this Diwali’s e-commerce sales showdown, that arch rivals Flipkart and Amazon even resorted to taking jibes at each other through interviews and statements issued to the press.
It was Flipkart that fired the first salvo. On 6 October, the day the Indian e-commerce poster boy concluded the Big Billion Days sale, Flipkart issued a media statement openly mocking Amazon’s sale numbers.

“(Flipkart’s) total units sold include only physical goods and do not include virtual membership and low-cost items like churan, hing, candy, detergent bars and eggs!,” a Flipkart spokesperson said in an emailed statement to Indiaretailing Bureau.

The statement was in response to Amazon’s press release that its single highest-selling product during its Great Indian Festival sale was the Amazon Prime subscription, and groceries were among its big sellers.

Amazon, however, was quick to give a fitting reply. Amazon India Head, Amit Agarwal responded saying that his company had accomplished in three years what Flipkart hadn’t despite launching much earlier and acquiring several companies including Myntra and Jabong (as told to a leading national daily).
Agarwal added that he was proud that customers were shopping online for everyday items, such as hing and churan, as well as for mobile phones, televisions and other products. Snapdeal, however, chose to remain a silent spectator during the entire showdown.

The open barbs and mocking shows that e-commerce face off is not settling down any time soon. With speculations being rife that China’s major Alibaba is all set to make a big bang entry in India – probably in the next year – the game is all set to intensify further.