Online retailers to spend big for a sparkling festival season

Consumers are likely to have a cracker of a festival season as top e-commerce companies plan massive discounts, freebies and offers worth upwards of ₹3,500 crore to boost sales. Online players get about 40 per cent of their total annual sales during these months, and they are going all out to woo buyers. Online retailers such as Amazon, Paytm, Jabong, ShopClues, Snapdeal, Flipkart and Quikr are doling out hefty discounts apart from cash-back offers and loyalty points.

Alibaba-backed mobile payments firm Paytm, which is participating for the first time as an online marketplace, is spending around ₹500 crore on marketing, promotions and offers to both customers and sellers just for Diwali. To put that in perspective, India’s largest consumer goods maker, Hindustan Unilever, with sales pegged at around ₹30,000 crore, spends ₹2,500-3,000 crore annually on promotions.

Saurabh Vashistha, Vice President (business) Paytm, told

BusinessLine that the company was expecting a three-fold increase in traffic and sales compared to any other month. “We have enhanced our last-mile delivery and for the first time tied up with several regional and small logistics players. This has been done to provide same-day delivery at small towns, from where we expect about 50 per cent of sales.”

According to industry players and experts tracking the sector, this year will see the highest advertising and marketing spends by e-commerce players since the sector took off three years back. Pitch-Madison Media Advertising Outlook, the benchmark study on the growth of the advertising industry, has revised its forecast for 2015 upwards from 9.6 per cent to 13.8 per cent. This is primarily due to a 70 per cent growth in spends by e-commerce firms.

“We have taken measures to increase the capacity of our servers. We are expecting 150 per cent growth in sales,” said Nitin Aggarwal of ShopClues. The online marketplace, which sells products at wholesale prices, is offering loyalty points worth up to ₹1 lakh to its customers. These points, called “cluesbucks”, can be used at the platform any time to buy more products.

While most of the companies are yet to turn profitable, investors are still pumping in money to drive volumes and hook consumers. According to reports by Google India, Technopak Advisors and E-tailing India, the country’s online retail market is expected to be worth $75 billion by 2020 from about $5 billion now.