India’s Festive Season Fails To Revive Slowing Economy

India’s biggest festive season, which runs from the start of October until the end of November, has failed to revive the economy despite big discounts from Amazon India and Walmart’s Flipkart, as reported on Wednesday (Oct. 9).

Although eCommerce sales in India had a $3 billion gross merchandise value (GMV) during the six-day festive sale from Sept. 29-Oct. 4 – 30 percent higher than last year – it’s a far cry from the 93 percent increase seen from 2017 to 2018, research firm RedSeer indicated.

Online sales in India were forecasted by Forrester to generate about $4.8 billion between Sept. 25 and Oct. 29. Analyst Satish Meena told Reuters that about 80 percent of projected sales – $3.84 billion – should happen between Sept. 29 and Oct. 4.

The first six months of 2019 showed weak sales for both Amazon and Flipkart in India, Meena told the news outlet. Disruptive policy changes forced both companies to remove listings for thousands of goods.

Amazon India has invested over $5.5 billion in the South Asian country, but got only 22 percent of total sales during the key week. RedSeer estimated that Flipkart got 63 percent of the market share.

An Amazon spokesperson said that “this event has been our biggest celebration ever,” with more than 99 percent of orders coming from India by way of 65,000 sellers from 500 cities.

The Hindu festival of Diwali on Oct. 27 usually triggers widespread shopping in the weeks prior to the holiday.

Disruptive regulation is not the only reason for India’s economic slowdown. “Overall, 2019 has been a slow year for eCommerce,” Meena noted. “Two things are clear, though. One is that there remains a big opportunity for eCommerce in India. Second, consumers from smaller cities and towns are increasing their online spending.”

Both Amazon and Flipkart announced record sales on the Sept. 28 opening day of their annual festive season sales in India. Amazon reported record sales of about $7.07 million in 36 hours for the premium smartphone brands category. Flipkart, which is owned by Walmart, said all major categories – including beauty, baby care, private labels and furniture – saw double-digit sales growth from a year ago in the first day.