The 21-day lockdown to control the novel Coronavirus has hit the online retail brands hard as India’s largest E-tail platforms like Amazon and Flipkart have suffered an estimated loss of at least $1 billion in gross sales. The brands have stopped selling non-essentials till at least the middle of next monthconsidering the COVID-19 outbreak and the current government directives.
Moreover, the online retail players are expected to grow only by 5% this year, in the most optimistic scenario, compared to about 26% growth in the previous year to reach $23-24 billion in gross sales.
Despite online grocery seeing a spike in orders, it constitutes only about 10% of overall sales for e-tailers. Last year, egrocery sales stood at about $2 billion. Online platforms see $50-60 million in daily sales around this time of the year, which for several players is down to zero. Smartphones, large appliances, electronics and fashion are the top drivers of gross sales for e-tailers, contributing 60-70% of the total. To be sure, these data points are based on current circumstances and may evolve further, for better or worse, based on how India manages to deal with the pandemic.
Satish Meena, senior forecast analyst at Forrester said,“If they (online retailers) can grow by 5% this year, they should feel lucky. Even after the lockdown ends, consumer spending will be hit. Even with EMI waivers, people will push many of their spendings to next year.Retail sales in China were down 21% in the last two months and e-commerce sales grew by only 3%, but grocery is a big part of online sales in the country, unlike India."
Even before the outbreak of the coronavirus, overall consumer spending was muted owing to broader economic challenges. But the virus spreading at this pace brought online commerce to a screeching halt. Last year, 140 million Indians shopped online at least once, according to Forrester. This might not grow significantly in 2020 even though online grocery and medicine delivery platforms are seeing new customers sign up.