In what was the first big sale event of 2019, online merchants on Flipkart and Amazon registered a tepid response, blaming weak consumer sentiment and lack of awareness created by the two firms.
The sales which kicked off on January 20, did little to move the sales needle for online vendors despite them running promotions. They said this was unlike previous promotional events held by the online marketplaces ahead of the Republic Day.
“This sale was nowhere near as good as previous years. We easily did 3-4 times of our daily sales during the event last year, but now it’s hardly 1.3 times. The number of promotions they (Flipkart and Amazon) carried out was very less,” said a seller of computer accessories on online platforms.
The lacklustre performance during the sale is a double whammy for online marketplaces which are already reeling under the pressure of becoming compliant with changes to India’s FDI laws in online retail. On December 26, last year, the Department of Industrial Policy & Promotion (DIPP) said any vendor that sold over 25% of goods on a single platform would be deemed to be a captive seller on that platform.
“Typically these kind of sales, whether it’s Republic Day or one of the smaller events, we expect to see vendors doing sales that is around 3-4 times the normal. If it’s lesser than that, then it raises a serious question about the sentiment in the market,” said an analyst who did not want to be named.
Both Flipkart and Amazon have sought for an extension of the February 1 deadline that the DIPP has set for them to comply with the changes in the rule. An analyst theorized that the two marketplaces could have gone slow dolling out discounts to customers to keep a low profile as they sought an extension from the authorities.
“Yes they (Flipkart and Amazon) did not advertise as much this time, but I don’t think that would have made any difference. Consumer sentiment is at an all time low and no amount of deals and discounts will change that. Even sales in the offline channel are slower this year,” said another online seller.
Screenshots of conversations on WhatsApp and Facebook groups shared by sellers showed that it wasn’t just a few sellers who witnessed slow sales, the issue affected a majority of online vendors. While an Amazon spokesperson said the company was “encouraged by the response” of customers during its sale, Flipkart did not respond to queries from the Economic Times.
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