Low sales forecast for sale season, Paytm's large investment may see other giants struggle
In India, holiday season is synonymous with sale season, but this year expectations are low following de-monetisation. The GST and Paytm Mall’s large investment for the season could further put pressure on other big brands.
After the retail slump brought on by demonetisation and the introduction of the Goods and Services Tax in July, the Indian fashion and lifestyle market has been experiencing many difficulties. It is hoped that holiday season sales will add some movement into the market. However, the current forecast is for a slow sale season that will see customers make purchases, but not at the rate they did last year.
In an attempt to lure bargain hunting shoppers who want to shop but do not have the funds to splurge, Paytm Mall has invested 1,000 crore rupees (approximately 150 million dollars) for the festival season to put into offers and deals on their products. Whilst this may indeed draw in customers to their e-commerce store, it could make life harder for e-commerce giants such as Flipkart who have not made such a great investment.
Sanchit Vir Gogia, the Chief Analyst, Founder, and CEO of Greyhound Knowledge Group said about the current economic climate in India: “Demonetisation and goods and services tax (GST) have had its impact on every sector. The mood is sombre in the country. Spending patterns are quite low this year in contrast with last year.” Moreover, Gogia went on to say: “India will spend during the festival time but no matter what e-commerce players will offer by way of discounts, sales won’t be high.” In this way, the sale season could see some e-commerce business make back some profit but see others out of the game if they fail to catch up.
One e-commerce business that has critics worried is Flipkart and Paula Mariwala, Co-Founder of Stanford Angels, said: “with Paytm's entry, Flipkart will become a struggling child in the e-commerce family.” Although Flipkart recently took in a large amount of investments, Paytm Mall may start to replace them, as well as Amazon, as leaders of the e-commerce market in India.
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