India’s top online marketplaces, Amazon and Walmart-owned Flipkart, are launching promotional events, beginning August 6, aimed at helping sellers liquidate old inventory and free up working capital ahead of mega festival sales, according to company executives.
Amazon’s two-day sale will be its first large promotional event since the easing of the lockdown. Flipkart’s four-day event will focus on electronics, appliances and fashion, an analysis of the deals on the platform shows.
“The sale(s) are largely a result of pressure from sellers,” said a top ecommerce executive, “to help move inventories they’ve been sitting on since before the lockdown and free up working capital ahead of the festive period”.
For both ecommerce majors, hosting the sale this week has become a matter of urgency as the moratorium on working capital loans for sellers — granted by the government to ease disruption caused by the pandemic — is due to expire on August 31.
“With the moratorium period coming to an end and no clear visibility on extension, it’s time for sellers to take actionable measures,” said a top executive at one of the leading invoice discounting platforms.
According to a Nielsen report commissioned by Amazon, 43% sellers are citing business revival as a primary objective for participating in the event.
“Prime Day provides an opportunity for the smallest of businesses to participate, rebound from recent challenges and grow their business,” an Amazon spokesperson told ET, adding that more than 77% of sellers are participating in Prime Day for the first time and 68% are launching new products.
Industry executives said that while the upcoming sales will last for a few days, it typically takes 2-3 weeks for all shipments and settlements to be completed at the seller’s end, citing this as the reason for the rush to host a sale even before Independence Day, which typically registers a spike in consumer spending driven by nationalistic fervour.
“We really want these sales to happen,” said Aman Gupta, cofounder at electronic accessories brand Boat. “This is the first sale happening in a long time and ecommerce sales are critical. This is a good time for all of us to test the waters before the Diwali sales.”
Flipkart did not respond to ET’s queries on the developments.
Analysts expect the ecommerce marketplaces to post a strong performance during the upcoming festive period as consumers continue to prefer online shopping due to fear of Covid-19. Brands in fashion, consumer electronics, large appliances and furniture are seen as drivers of the sales.
“The reason why brands and marketplaces are preparing for the festive sales is because it’s critical for them to get off the blocks,” said Ankur Pahwa, Partner at EY. “…especially in discretionary categories like fashion and consumer electronics which are yet to fully restart.”
While the ecommerce sector has recovered nearly 90-100% of its gross merchandise value in July, this has largely been driven by categories such as grocery, personal care and other non-discretionary items. Smartphones, fashion and white goods, which make up for the bulk of sales on Flipkart and Amazon, still remain below pre-Covid levels. “They (brands) are expecting a fair uptick over current sales during the (promotional events),” Pahwa said.
Amazon has even labelled its upcoming two-day sale as ‘Prime Days’, a nod to its popular two-day global sale event. Analysts estimate that in 2019 the company shipped 100 million items and clocked $4 billion in gross merchandise value from the event, typically held in July.
This year the ecommerce behemoth plans to move the event to the fourth quarter, according to Amazon CFO Brian Olsavsky. “The one exception is Amazon India, which will host Prime Day on August 6 and August 7,” he said in a post earnings conference call last week.