In the days leading up to their flagship annual sales, e-commerce giants Flipkart and Amazon spared no expense marketing the events. While Amazon went to town crowing about the deals on offer in its Great Indian Festival sale, Flipkart had Indian A-list celebrities like Virat Kohli and Deepika Padukone endorsing its Big Billion Days sale.
But even as the sales—which ran from 29 September to 4 October—ended, the two companies have continued their PR blitz. Both companies claimed record sales growth, attributing it to everything from increased traffic from small-town India to more sellers on their platform.
The supposed success of their sales is both expected and unusual all at once. Expected, because these sales traditionally account for around a quarter of the platforms’ annual revenue. But unusual because this year is markedly different from the last few. India is in the midst of an economic slowdown, with consumer sentiment reaching its lowest point in six years this September, according to a survey by India’s central bank. There’s been a decrease in demand for everything from cars to biscuits.
To add to the slowing economy, the Indian government also dealt marketplaces like Amazon and Flipkart a bad hand earlier this year. The government’s new foreign direct investment (FDI) rules for e-commerce, issued in February, forbid e-commerce firms from having an equity stake in vendors operating on their platforms.
Meanwhile, sellers—the supposed lifeblood of online marketplaces—have also grown irate at the deep-discounting prevalent on these platforms. Various trade bodies have publicly criticised both Amazon and Flipkart, with the Competition Commission of India also taking notice of their pricing practices.
With the odds seemingly stacked against them, these big banner sales should have struggled. Indeed, despite Flipkart’s proclamations of record sales, its GMV sales stood at Rs 8,400 crore ($1.18 billion). This is a shortfall of Rs 800 crore ($112.5 million) from its internal target of Rs 9,200 crore ($1.29 billion), according to a source in the company.
Even so, both Amazon and Flipkart claimed another year of record sales. How? Occam’s razor would point to discounts. “It’s not rocket science; deals are driving the sales. India is very price-sensitive, people automatically try to optimise their buying,” an industry insider said.
Over the years, discounts have become an inseparable part of e-commerce. Offered throughout the year, they spike during festive sales, with discounts north of 35% par for the course. But discounts are no longer so simple. With small sellers refusing to march to the beat of the e-commerce marketplace drum and the government curbing the clout of Amazon and Flipkart’s own sellers, platforms have had to get creative.