The Indian eCommerce industry has seen a phenomenal growth in recent years, and according to IBEF, it is expected to become the second largest eCommerce market in the world by 2034. The festive season, in particular, accounts for a significant portion of the revenues each year.
This year, the pandemic has had a deep impact on everything. With lockdown and restrictions during the months of March to May, there was a severe dip in numbers across sectors. Brands, who had till then been dabbling in eCommerce, started to view it as a critical channel. In anticipation of the upcoming festive season, they started to invest significantly in their own direct-to-consumer (D2C) ecommerce store.
At Shoptimize, we have been tracking the performance of our customers’ direct-to-consumer stores for the last few years. Despite the celebrations and festivities being comparatively muted this year, we have seen that consumer spends during the festival season have not been impacted. Fuelled by shopper fears about going to retail stores, we have, in fact, seen that online stores got a big boost. September to November 2020, covering the two big Indian festivals of Dussehra and Diwali, saw a tremendous growth in visitors, conversions and sales. A deeper analysis of the data for the 30 day period of Diwali festive sales, in particular, revealed some interesting trends.
Spread over a 100+ D2C stores across different sectors on the Shoptimize eCommerce platform, here is what we found.
Online store revenues see phenomenal growth
Collectively, the D2C stores on Shoptimize platform, with close to 6 million shoppers, saw a whopping 182% growth in revenues during the Diwali festive sales month this year. While COVID accelerated the transition to online shopping, the festive season brought it to its peak. Recent years have seen shoppers buying on marketplaces, taking full advantage of the favourable offers and sales. But as they have matured in their online shopping experience, their needs have also changed. Price is no longer the only consideration. Instead they are looking for their favourite brands and its unique shopping experience. With brick and mortar brands now offering a more evolved, targeted and personalized experience on their D2C stores, consumers have been quick to follow.
In the past years, online stores typically saw a rush only close to the festival days of Dussehra and Diwali. This year saw a longer shopping period as shoppers started buying earlier. With COVID putting a dampener on travel and socializing plans, shoppers probably anticipated going online to shop and decided to avoid the last minute rush. Stores also started showcasing their festive offers early on to increase sales and conversions. The 30 day Diwali sales period saw a 484% increase in the online store visitors and sessions. While sales hit their peak on 23 October 2020, the entire three months of September to November saw heightened activity and sales.
Stock out was a thing
The extended festive buying period brought with it a unique problem – early stock out. Many brands could not forecast the huge spikes in demand and ended up being stocked out before the festival itself.
Festivals are all about the sweets
As anticipated, the Food and Beverages sector accounted for 41% of the revenues during the festive season.
While the Electricals and Electronics segment came in second, this was more due to the higher order value per item, than actual increase in number of transactions. The general sentiment in this sector seemed muted as people continue to be cautious about spending on anything non-essential.
Buoyed by pent up demand as fewer people stepped out to physical stores to do their annual festive shopping, Fashion accounted for 19% of the revenues.
Average order value goes up
Stores in the Food and Beverages sector saw a 152% growth in revenues, with an average order value of INR 3000. Gift boxes, in particular, were very popular and accounted for this increase in AOV. The one constraint that a few of the stores had to manage was delivery beyond the territories where they were physically present due to the shelf life of fresh sweets. This had other implications as well, in terms of a narrow target segment and the associated high acquisition costs. Packaged sweets and savouries, on the other hand, made up for the bulk of the demand. Many of our customers hit all-time-highs when it came to per day sales, with a few crossing INR 10 Lakhs of sales per day.
Shoppers preferred to buy their new clothes online
Apparel and footwear stores saw the highest year-on-year growth with 400% increase in sales. The season was particularly successful for new age, digital first brands catering to the millennial market segment.
Campaign performance hit all-time-highs
In anticipation of the early shopping demand, brands started their marketing campaigns very early on. Even as competition was high on keywords, brands adopted different strategies including focused search ads, targeting, dynamic retargeting etc with great effect. When compared to the pre festive period, on an average, the stores saw a 106% increase in conversion rates.
International markets opened up
For the first time, stores on the Shoptimize platform expanded their reach into international markets. With shipping and logistics partners stepping up their operations to service overseas markets, brands also started targeting the overseas buyer. The food and beverages sector, in particular, saw a huge demand, as shoppers driven by nostalgia and a longing for the familiar tastes of home racked up the orders. International orders accounted for around 30% of all the orders in this segment, with the US accounting for the highest demand.