Today is Diwali, the Hindu holiday of lights. It’s kind of like Christmas and New Year’s Eve combined for consumers in India—it’s a gift-giving holiday that also marks the Hindu new year.
And, according to data from digital commerce fulfillment company Delhivery, it is the peak shopping season in India, which means ‘tis also the season retailers are vying for hearts and minds with promises of low prices and fast delivery even to rural areas.
In an October 2016 study, Delhivery forecasted consumers in India would collectively spend $1.8 billion online for Diwali. That includes purchases in categories like: mobile phones, tablets and computers; apparel and accessories; and home goods. The following year, the Associated Chambers of Commerce and Industry of India estimated 68 percent of consumers would spend 5,000 to 10,000 rupees ($70 to $140) for Diwali 2017. (They did not respond to requests for updated figures; 2016 is the most recent available data.)
It’s no secret U.S. retailers are eager to reach the 1.3 billion consumers in the world’s second-most populous nation. After all, that’s why Walmart coughed up $16 billion for a majority stake in homegrown platform Flipkart. Meanwhile, Amazon has had a presence in India since 2013.
And in the heavyweight championship matchup that is Amazon v. Walmart: Smackdown India, competitive intelligence tool SimilarWeb says Amazon has the edge with India’s first and third most popular shopping sites by average monthly visits. Amazon.in is at the top with 339 million per month—and Amazon.com follows with 54 million per month. Flipkart is in the middle with 175 million.
A report from Forrester on the Indian ecommerce landscape in 2019, however, found Walmart has a dominant position in fashion. And, notably, a Diwali custom is to buy clothes. A Walmart rep said Flipkart fashion sites Myntra and Jabong are offering a special collection of brands, styles and offers for Diwali shoppers and it debuted three new private brands in advance of the season as well.
Forrester also found Flipkart is expanding its logistics network to appeal to rural shoppers.
At the same time, the research firm said Amazon is challenging Flipkart in cities with Prime—Amazon.in itself said Prime sign-ups nearly tripled during its pre-Diwali promotions this year. Forrester also noted smaller ecommerce players like Snapdeal and ShopClues will find it difficult to compete in India next year without differentiated offerings “as Amazon and Flipkart outfight them in the low-price category.”
Walmart in particular seems to be pushing familiar everyday-low-prices messaging to distinguish itself in India.
A rep said the retailer recently brought its affordable Great Value brand to the market. In addition, Flipkart kicked off the Diwali shopping season with its Big Billion Days sale, which it called “the biggest online shopping festival the country has witnessed.” It did not share sales figures, but called it “extremely successful,” and said Flipkart has additional sales planned for before and during Diwali.
It is also appealing to consumers who don’t want to “[feel] the pinch of making full payments in one go” with options to defer payment.
For its part, Amazon.in had its fifth annual pre-Dewali Great Indian Festival from Oct. 10 to 15 and announced “record sales across all categories.” (It did not elaborate.)
Because Diwali celebrants start by cleaning their homes and workspaces and then putting out lights, Amazon.in said itsaw sales of detergents, household cleaners and hand washes increase sevenfold—and sold enough string lights in the final 24 hours to light up Mount Everest, which, for the record, is 29,000 feet.
Amazon.in also said over 80 percent of new Diwali customers hailed from small towns this year, which is perhaps a result of expanding its delivery network in advance of the holiday season for faster delivery “into the hinterlands of India.”
But as these U.S. retail giants duke it out around the globe and in small-town India alike, not everyone is bullish about the market potential overall.
“Everyone thinks because there’s a billion people there, it’s going to be the next China, but … you have a few issues: One, there is a ton of language fragmentation, there’s a high illiteracy rate … and then on top of that … the percent of affluent individuals is much smaller than even China,” said Forrester retail analyst Sucharita Kodali. “If you look at median income, it’s significantly lower than China … I’m not sure who the target market is that they think is so large. If you peel the onion back, the addressable market is maybe 100 million…”
Indeed, in terms of gross national income (GNI) per capita, which reflects the average income of a country’s citizens, the World Bank classifies India as a lower-middle-income economy with a GNI per capita of $996 to $3895. By means of comparison, it classifies China as an upper-middle-income economy with a GNI per capita of $3896 to $12,055; and the U.S. as a high-income economy with a GNI per capita of $12,056 or more.
Instead, Kodali said the addressable market in India is probably more akin to an Italy or a Spain from an ecommerce standpoint, which she pegged at around No. 10 or No. 12 on the list of countries for retailers to pursue.