Tier 2 cities to drive online sales boom this Diwali

Online sales will rise 28 per cent to reach $11.8 billion during the upcoming festive month this year, according to a report by Redseer Strategy Consultants.

The festive month is generally defined as a period starting from the first sales event and lasting roughly till Diwali week, including non-sale or business-as-usual days in between.

The rosy forecast came after the pandemic pushed many customers in Asia's No 3 economy, including those in its smaller cities, to shift their shopping of everything from essentials to nice-to-have items online for reasons including convenience, safety and affordability.

“Covid pushed online penetration,” Sanjay Kothari, Associate Partner, Redseer Strategy Consultants, told DH, adding that the firm was forecasting four times growth in the number of online shoppers from 2018. “This growth has been driven by accelerated digital adoption and increasing penetration in Tier 2+ cities. We expect this expanded customer base to reflect in higher sales during the festive sales period as well,” he said.

Redseer predicted robust growth for the fashion category this season as first-time shoppers typically started their online journey with products in that segment that often had lower average selling prices. More participation of fashion-led players in the season is another factor helping the category.

Mobiles, electronic items and large appliances will also see strong demand due to better deals and new launches, but their contribution to the overall sales pie will fall, the firm predicted.
The growth in festive sales will further push the overall online retail gross merchandise value to rise to $68 billion in 2022, from $52 billion in 2021. GMV refers to the value of goods sold on a platform.