The (ecommerce) disaster that never was

KOLKATA: Much Amazon/Flipkart led ado about nothing?Last December, the government rewrote ecommerce rules, gave a tight end-January implementation deadline to ecommerce majors, who vainly protested, and lobbied to change rules/extend the deadline – and now, latest data from market trackers and brands show there’s been no adverse impact on online sales.Contribution of ecommerce in sales of large categories such as consumer electronics, mobile phones and fashion has gone up. This is significant because these categories account for 60-65% of total online sales in Amazon India and Walmart-owned Flipkart.This is especially significant in the context of commerce and industry minister Piyush Goyal telling online merchants this week that new rules should be followed diligently. 69967108 Sales tracker GfK’s data shows that for television, contribution of ecommerce to total sales was 20% in 2018 – ecommerce operated under earlier rules for the whole year – and is 30% in the January-April 2019 period. Ecommerce operated under the so-called stricter regime from February onwards.For smartphones, the numbers are 38% in 2018, and over 40% in the January-March 2019 period, as per shipment tracker International Data Corporation (IDC). The conclusion holds even for quarter-on quarter comparison — 36% in January-March of 2018, 40% for the same period this year. Another market tracker Counterpoint Research estimates ecommerce accounted for 43% of mobile sales in 2019’s first quarter.Market trackers told ET estimates show continuing high growth in online sales. Numbers for April and May are initial estimates, to be finalised shortly. Apparel brands and shoemakers also said online sales have been robust and there has been no dip whatsoever.Brief Disruption in OperationsSome brands like Puma and Woodland reported an increase in online contribution to total sales.An Amazon spokesperson told ET the FDI policy change “disrupted our marketplace for a while, because we took the time to audit and ensure compliance” but added that new rules “did not have a long-term impact as we were already in compliance.”“We cannot isolate any one reason between the changes in policy and volume of sales on our marketplace as sales are driven by many factors...The sellers decide the prices and the volumes they need to sell based on customer demand which can vary at any point of time of the year through seasonality,” the spokesperson said.Flipkart did not respond to an email seeking comments.New FDI rules in ecommerce had, among other things, barred marketplaces from hosting sellers that are group companies, restricted deep discounting and mandated that no seller can buy more than 25% of its stock from the marketplace entity or its wholesale arm.Once the government refused to budge on the February 1 deadline, some large sellers, brands and products disappeared for a brief period from major ecommerce marketplaces. But sales figures show disruptions were brief. For instance, online television sales plunged by 47% in February, but this was more than made up by the upsurge in sales during March and April, as per GfK. Counterpoint data shows the same thing happened with smartphones. 69967129 “Ecommerce has been able to build a clear proposition for itself beyond pricing and discounting,” said Puma India MD Abhishek Ganguly. “Larger availability of stock and delivery to the smallest of towns continues to drive online sales despite online sellers steering away from deep discounting,” he added.GfK India’s MD Nikhil Mathur said three key growth drivers for online sales are price-feature positioning, focus of large players on exclusive offers for online, and the deepening of the digital shopping phenomenon.India CEO Madhav Seth of online-focussed smartphone maker Realme said brands made minor changes in the way they sell online such as selling through multiple partners rather than a few due to the tightened policy. “There was no disruption in sales at all and online will continue to remain a dominant channel,” he added.

from Economic Times https://ift.tt/2IPWhma