This festival season may turn out to be a money-spinner for e-commerce platforms selling appliances and mobiles.
According to Nielsen India, shoppers are waiting for the festive season sale for buying expensive appliances and mobiles from online platforms.
“The shoppers today are anticipating and holding back their purchases for sale periods. While some categories such as home appliances are seeing a pent-up demand in lieu of safety and personal home convenience,” said Kunal Gupta, Lead, Consumer Intelligence, South Asia, Nielsen Global Connect.
“We believe the festive season will see a big release of this pent-up demand with e-commerce players gearing up for the upcoming sale season,” he added.
During the COVID-induced lockdown, most customers preferred buying essentials on an online platform.
In the e-commerce space, major categories such as fashion witnessed a restrained recovery and there has been a greater demand for mobile, home appliances & electronics online during the unlock period.
Nielsen data indicated that restrained spending during lockdown is enabling consumers to prioritise spending on categories to improve quality of living at home.
This is indicated by the steep increase in sales of products like televisions, water purifiers, washing machines, and grooming devices too. Work and education from home have led to an increase in sales of laptops for consumers on online platforms.
“This is a result of pent up demand from lockdown, coupled with recent sales by e-commerce players. The steep jump in sales by 1.3 times during the ‘freedom sale’ in August indicates consumer sentiment towards deal-seeking and price consciousness,” said Gupta.
According to Nielsen India data, mobile phones continued to contribute nearly half of all online sales with a share of nearly 48 percent. In particular, smartphones in the price range of above 15,000 doubled in this period indicating consumers need for staying connected with uninterrupted access to media and communication.
On the other hand, Fashion/ Apparels with a price tag of less than Rs 500 grew by 28 percent and now contributes about 40 percent of all sales in the category as shoppers lowered their spending on items above Rs 1,000 in pre-COVID era. This has resulted in slow recovery despite the slight boost from the sale period in June, Nielsen India.
As the FMCG industry in India is seeing a cautious recovery, e-commerce channel with a small base of 3 percent of total sales showed resilience in tough times.
During the lockdown, the data indicated that FMCG online had a steady adoption with first-time shoppers increasing month on month to 36 percent. The consumer spends and basket sizes also continued to expand online.
With the unlock, the FMCG consumption witnessed an early rebound in the months of June and July. This was on the back of suppressed demand during the lockdown period and reflected more prominently in non-food categories beyond essential baskets.
With the pent-up demand satiated in June-July, August witnessed a muted performance for the industry. As the industry is evolving, consumers shifted their preferences when it comes to price tiers, pack sizes, and product assortment. With job losses and salary cuts, consumers preferred value proposition while buying products.
According to Nielsen India, there was a visible sign of consumers either downgrading to more affordable (mass & popular) offerings or shifting towards value for money in large packs.
Also, private label share went up during the lockdown in modern brick & mortar trade channel and regional players performed better than the national players during the COVID period. Both these trends hint at affordability reset in the play.
FMCG consumption was the hardest hit in bigger cities in India during the lockdown period, the impact was the least in villages which witness close to 40 percent of industry sales.