According to a new study from Nielson, in India products that cater to the consumer’s need for convenience and those that are beneficial in the stay at home economy dominated the holiday sales period from October 15th through November 13th.
With the need for communication and increased media consumption, mobile phones, and accessories continued to account for over half of e-commerce sales during the period. Electronics like laptops and printers increased their share by 10% compared to 7% during the festive season last year, which was no surprise given the increase in remote working and schooling.
Nielsen India’s E-commerce Consumer Panel, which provides a holistic and granular view of the online shopper and helps measure consumer behavior across more than thirty E-Commerce platforms, found a double-digit increase in the average spending of online shoppers for electronics and accessories (39%), mobile and accessories (12%), and fashion, including apparel, footwear, and accessories (10%). Appliances also saw a notable spending increase at 9%.
“Consistent with the trends that we are seeing globally, consumers in India are fitting into the homebound behavior,” said Kunal Gupta, Head, Consumer Intelligence, Nielsen, South Asia. “Triggered by the desire to make life and work easier and more convenient at home, we see a significant increase in shopper spend in categories that are perceived to cater to homebody needs on account of the pandemic.”
Geographically, the growth of e-commerce during the holiday period was led by Bharat (<10 lakh population towns). Nielsen reported a 16% increase in orders from smaller cities (<1 lakh population towns) and a 14% rise in shopper spends from >1 lakh+ population cities.
“Manufacturers and retailers in multiple markets such as China, Koreas, and South East Asia have long recognized the affinity of consumers to online shopping during popular festivals,” said Vaughan Ryan, Nielsen’s Consumer Intelligence managing director in Asia.
“The behavior of waiting and saving up for the big festival online sales have clearly turned into a consumer habit. It doesn’t come as a surprise that manufacturers and traditional retailers have online sales promotions on their own or have partnered with online platforms to get products faster to more consumers.”
A fifth of orders placed are returned or canceled – more pronounced in smaller cities
Attractive promotions and discounts also affected the number of order cancellations online.
Nielsen reported that every fifth order was returned or replaced by online shoppers, higher than the 17% cancellation rate last year. A higher cancelation rate of 27% was seen from smaller cities (less than 10 lakh population cities or towns).
“The cancellation/returns is a critical metric to track as it directly impacts the retailers GMVs since reverse logistics is an additional overhead to manage for retailers,” added Gupta.
“While on one end cancellations offer flexibility to consumers, on the other end they also lead to poor customer satisfaction if the returns experience is broken.”
Strong fast-moving consumer goods performance during the sale period under COVID
FMCG continued to record the most orders during holiday sales with a 35% unit share. FMCG sales were higher during the festive period this year versus the pre-COVID period and matched the same level during the Republic Day sale in January this year.
Shopper penetration remained high at almost 20% during the period. An uptick from 14% in 2019, indicates that more consumers were persuaded to shop online for FMCG.
“We see the gradual recovery of FMCG online from April when consumers were mostly buying essentials online and there were supply and delivery issues,” said Gupta. “The Big Day Events which usually happen during festive sales in August and October helped accelerate the recovery of FMCG.”
The personal care category sees a comeback
In terms of the average number of FMCG categories that online shoppers bought, Nielsen reported an average of nearly three categories, the same as last year. While staples and snacking saw increased growth during COVID with 35.3% and 14% value contributions respectively, personal care significantly gained during the period with 54% value contribution.
“Post Lock-down in April 2020, we have been seeing staples, impulse, and hygiene as consistent gainers from personal care,” said Gupta. “Festive Big Days altered this behavior by prompting the consumers to stock up their personal care supplies. Whether this marks the comeback of Personal care (vs staples) or not, we are yet to see.”