Growth in new users brings cheer to e-commerce players
THE TOP TWO ONLINE RETAILERS, FLIPKART AND AMAZON INDIA, CONTRIBUTED TO THE BULK OF THE GROWTH
BENGALURU: The number of new users in India’s $18 billion online retail market has surged this year rebounding from 18 months of sluggish growth, as cheap data, faster internet connections and proliferation of smartphones made online shopping accessible to people in smaller cities.
The top two online retailers, Flipkart and Amazon India, contributed to the bulk of the growth. At least four executives at both Flipkart and Amazon said new user growth, a key indicator of the health of the industry, climbed more than 50% in the past year.
In recent interviews, top executives at both companies pointed to a revival in new user growth, while conceding the slump in 2016-17. “Our new user growth is at 55-60%. Right now, it’s not a problem—new user growth is not a problem at all,” said Flipkart chief executive Kalyan Krishnamurthy in an interview on December 12.
Amazon India’s initiatives such as investments in infrathe structure, financing, launch of a Hindi version and start of Amazon Easy stores in small towns helped improve the shopping experience for customers, said a spokeswoman in an email.
Two factors have contributed to the revival of growth, according to the companies. The first is the fashion category, which easily commands the highest sales volume. Second, a growing number of people in so-called tier-ii and tier-iii cities and towns are now familiar with online shopping due to faster internet access and wider penetration of smartphones.
“The bigger growth is coming from tier-ii and tier-iii cities. The fashion business for us is so big, that from a pure number point of view, a huge number of new users do end up coming from fashion,” said Krishnamurthy.
number of Flipkart’s monthly active users was “less than 10 million in 2017, while it has jumped at least 60%” over the past 12 months, he said.
Last week, Mint reported that Flipkart had transaction growth of more than 80% in some months, and the company plans to push newer categories such as furniture and groceries over the next three years.
Similarly at Amazon, new user growth has been healthy in the past 12-18 months.
In the Diwali festive season sale this year, 80% of Amazon’s new customers “came from really small towns and our Prime member sign-ups surged nearly three times”, said Amazon senior vice president and country manager Amit Agarwal.
Over the past year, Amazon has repeatedly claimed it is ahead of Flipkart on metrics such as app downloads, desktop visits and mobile website visits.
According to data from market intelligence firm Similarweb, which tracks website traffic, Amazon India’s desktop visits continue to be more than those of Flipkart.