It has been a tremendous month for etailers in the country cashing on the festive season spree. According to research firm RedSeer, e-commerce companies are believed to have registered transactions worth Rs 11,000-13,000 crore ($1.7-1.9 billion) in October, driven by festive offers and discounts on their platforms. The combined sales of all the top three e-commerce entities – Flipkart, Amazon and Snapdeal – during last month’s first week sale was valued at around Rs 6,500 crore, up 20 percent over the previous year, according a report in Financial Express.

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Is Festive Season Sales – Enough For eCommerce Firms?
According to sources,around 50% of the total annual sales for the top five e-commerce companies take
place within 2 months of festive season (October-November).
#DigitalErra Thought Corner
It has been a tremendous month for etailers in the country cashing on the festive season spree. According
to research firm RedSeer,e-commerce companies are believed to have registered transactions worth Rs
11,000-13,000 crore ($1.7-1.9 billion) in October, driven by festive offers and discounts on their
platforms. The combined sales of all the top three e-commerce entities – Flipkart, Amazon and Snapdeal
– during last month’s first week sale was valued at around Rs 6,500 crore,up 20 percent over the previous
year, according a report in Financial Express.
What does it imply? Is our e-commerce industry making a lot of money? The story could be actually a
different one due to some stark realities.

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Bullish Competitiveness
In a country of 1.2 billion people, only 400 million have direct access to internet, of which roughly 20%
or 80 Million transact online. So it roughly sums up to 6.67% of the total population. This impacts
directly on CAC,marketing spend and consequently valuation. Without proper analytics of the
distribution, chances are that the same groups of people were chased down by all the e-commerce
companies together at the same time. All the companies ended up distributing and re-distributing the same
crop of people over and over again.
Cash-Burn
The burn rate expenditure on staff, rentals, forward and reverse logistics and customer service still make
their business vulnerable to losses. Transporting low value items (small electronics and mobiles from
small retailers) can never recover the logistics costs involved. A majority of their business still comes
from preferred distribution companies. These new product distributors were created after amendment on
FDI rules for e-commerce which states that there cannot be more than 25 percent bought from one seller
alone (remember Cloudtail of Amazon and Flipkart’s W S Retail).
“The fulfilment cost for these businesses is very high and they also spend a lot on customer,” says
Kishore Biyani, Chairman and Founder of Future Group.
Need For A Retail Revamp
According to Ernst and Young, the organised retailing industry in India is $600 billion whereas the e-tail
industry is said to be around $8 billion in size. However,need of incorporating modern strategies is
imminent.
Retailing in India needs a shake-up, whether it is e-commerce or brick and mortar businesses. “Modern
brick and mortar retailing is yet to use technology to reduce sourcing and supply chain costs and e-
commerce companies still continue to play the discounts game,” says Mohandas Pai, Founder of Aarin
Capital.

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Conclusion
India’s e-commerce is going through a transition phase and aims to be a mature market. A too much of
reliance on festival sales can be a phase out option for players like Flipkart and Snapdeal. They need to
continue the momentum gained in this period and can even reclaim the market share conceded to
Amazon. Meanwhile, Amazon has done a remarkable job in a comparatively little time frame and they
also have deepest coffers for long sustainability.