Ecomm sales sluggish in Q1 of CY24 as mass market loses steam

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Softening demand seems to have led to a slower growth in e-commerce sales at 12-15% in the last quarter of FY24, which is a considerable dip from the 20% recorded in Q4 of FY23, The Economic Times has reported quoting market research data.

The declining demand is apparently signalled by contracting volumes. The report has overall value generation and attributed it to the sale of higher value items. However, an ecommerce executive also said that improvement is visible in the month-on-month sale figures in this domain.

“This period (January-March) is usually a slow month for ecommerce firms, and though this January was bad, we have seen growth return over the last three weeks, and we will likely see about 20% growth rate return by April,” said Satish Meena, advisor at Datum Intelligence. Market trackers appear optimistic of better outcomes “with the arrival of summer leading to more demand in certain categories.”

Market experts also said that the beginning of the calendar year also marks the time when fashion and peripheral segments clear inventory.

Smartphones sluggish

It is to be noted that smartphones are one of the major engines of online retail and no major launches have taken place so far this year. “Growth (this year) has been muted, but things should pick up April onwards. The pace of growth will depend on the volume of shipments,” a senior executive at one of the top three ecommerce logistics firms said.

In a sense, it is also continuation of a trend. The closing months of 2023 also witnessed weak sales for online sellers, which followed bumper sales during the festive season extending from end-September to Diwali.

Sales of smartphones were flat and shipments even fell slightly but average selling prices (ASP) remained high. “For smartphone sales, there is a lesser ‘fear of missing out’ that online exclusives used to bring earlier. Offline stores are also now able to match online players in financing, and discounts are not that sharp anymore, leading to offline becoming the larger sale channel with 52% share in calendar year 2023,” said Satish Meena of said Datum Intelligence. Counterpoint Research, a market research firm, has said overall smartphone sales remained flat in the country in 2023 at 15.2 crore handsets.

In the apparel sector, end-of-season clearance sales resulted in improvement. One of the trends visible in the market has been the rise of sales of premium products but mass-market products showed less growth.

Rise in inflation also played spoilsport. It prevented a rise in the sales curve for online retail. Movement of FMCG items on quick commerce platforms such as Flipkart, Amazon India, Meesho, Tata Neu and Reliance’s JioMart also displayed sluggish trend.

Beauty brands shine

One bright spot in the landscape of indifferent sales has been online-first beauty brands. These have sold briskly registering strong growth at more than 25%. Apparently, sales in this domain were triggered by winter sales and events. Cofounder and chief operating officer at Sugar Cosmetics, Kaushik Mukherjee, said gifting in and around Valentine’s Day pushed up sales in this segment. “There is a little bit of softening in sales post Valentine’s Day, and we also see a shift from products like moisturisers, with the cold weather waning, and sunscreen and facewash coming back strong (sic),” Mukherjee told the newspaper.

In January, Nykaa authorities said that its beauty and personal care business grew faster than the overall industry growth rate. However, sales did not reveal uniform trends in items such as wearables and hearables, beauty, fitness and home and furnishing. The rate of sales in January-March period showed different trends in price points and sub-categories.

Experts estimate sales growth of about 15-18% year-on-year in home furnishing. For audio wearables, the growth rate can be 10-15%. The health and fitness category could close the quarter with 15-20% growth. This category includes supplements and gym equipment. Noise and Boult, which manufacture audio products have witnessed growth of more than 15%, compared to pre-festive season periods. “Our sales have gone up by over 15% but below 20%, depending on pricing and type of product, compared to the period before festive sales began,” Tarun Gupta, cofounder of Boult, told the newspaper. “We are also trying to shift from just focusing on unit sales to things like driving premiumisation and loyalty among customers in this period,” said Gaurav Khatri, who is the cofounder and CEO of Noise. Khatri admitted that sales had dipped following the festive period compelling them to focus on other trade channels such as offline stores and quick commerce to ensure that sales don’t sag.

Pallav Bihani, founder of supplements and equipment maker Boldfit, said the segment has seen an increase in sales pushed by a post-festive drive towards health-focused activity. “We usually don’t benefit massively from festive sales as that isn’t when the customer is thinking about fitness. We see another spike in April to June, as a younger, health-conscious base gets their summer breaks,” said the founder of supplements and equipment maker Boldfit, Pallav Bihani.