E-commerce discounts fade away; hit online shopping as fewer buyers log on

While mobile phone buyers have reduced by 17 per cent, fashion vertical saw a decline in buyers by 16 per cent.

Amid the ongoing economic meltdown, India’s ‘booming’ online retail market has also taken a hit. Digital shopping saw a decline not just in terms of buyers but also with respect to spending and average ticket price in the first half (H1) of 2019 “with the consumer sentiment being muted,” as per a note on the impact of economic slowdown on online shopping by research firm Kantar. In comparison to H1 2018, while the online buyers have reduced by 7 per cent, online spending and average ticket price have also gone south by 21 per cent and 27 per cent respectively.

“This study is to understand the behaviour of online shoppers rather than asking why they haven’t bought (in the said period). There are several things driving this dip could be people being cautious about the economy, regulations etc. So it could be a combination of factors. There is no one factor,” Hemant Mehta, Managing Director, Kantar & Chief Strategy Officer, Kantar South Asia told Financial Express Online.

In part, the decline in online shopping has also been attributed to reduced discounts by online shopping portals that “nearly halved between 2018 and 2019,” the note said. The fall in the number of buyers has been most severe in mobile and fashion categories. While mobile phone buyers have reduced by 17 per cent, fashion vertical saw a decline in buyers by 16 per cent.

The biggest drop (25 per cent) in the sale of mobile phones has been in less than Rs 15,000 bracket in the said period vis-a-vis H1 2018 followed by 15 per cent in Rs 25k – 35k segment and 11 per cent in over Rs 35,000 category. A slight discount cut of around 1 per cent was also visible in other categories like home electronics, furniture and home improvement categories.

“Discounts have also come down due to regulatory changes. We are in a situation where it is tough to say whether it is the supply side or regulatory side or the demand side driving this. Fashion and mobile phones would be at least over 50 per cent of the market, others are small categories. Categories that are essential for daily use like FMCG have shown resilience,” said Mehta.

FMCG and grocery segment, which is the 3rd largest category in terms of buyers, according to Kantar, has “weathered the impact of the slow-down better than most. In fact, the number of online shoppers has recorded an increase over 2018 with spends nearly doubling during this period.” The two categories combined saw an increase in buyers, spending, and average ticket price by 17 per cent, 19 per cent, and 21 per cent respectively.

“I think the dip is a blip. However, it would be interesting to watch the upcoming festive season and see how the consumer react to it that will give us a good clue how dampened the sentiment is,” added Mehta.