E-commerce discounts hit offline sales of consumer durables

financial chronicle

Business, Companies

E-commerce platforms account for just 5 to 10 per cent of the entire consumer durable sales.

Consumer durables clocked 57 per cent growth on the online platform.

Chennai: Heavy discounts offered on the e-commerce channels hit the offline sales of consumer durables and large appliances during the festive season. While consumer durables clocked 57 per cent growth on the online platform, the category as such fell flat in terms of growth during the festive season.

“E-commerce platforms account for just 5 to 10 per cent of the entire consumer durable sales. But the discounts that were offered on the e-commerce platforms disrupted the entire category. Customers were not happy with the discounts available in retail shops. Both sales and margins of retail shops, which account for around 95 per cent of our sales, were hit by the e-commerce sales,” said Kamal Nandi, business head and EVP, Godrej Appliances, and president, CEAMA.

While Onam witnessed a de-growth and Dusshera a flat growth, 10 to 15 per cent growth during the five days of Diwali was not enough to save the category. Overall, the festive season offered a flat growth for the category over last year.

While all the brands were offering the same discounts across online and offline channels, discounts on debit card and credit card, cash-back and other such offers doled out by the online platforms and their partners made the deals much sweeter.

“On an average, 30 to 35 per cent discounts were available on the online platforms and some products were sold at even 70 per cent discount for limited periods. Of this, the brands were providing only 10 to 15 per cent discounts and the rest came from the part of e-commerce portals and their partners. The online platforms had also set up end-to-end supply chain, associated with installation partners for post-delivery service, were providing EMI facility and giving extended warranties. All these contributed to the online growth in consumer durable sales, which was the highest among different categories,” said Eshan Tyagi and Saurabh Joshi, e-commerce analysts at RedSeer Consulting.

There were a few brands, which made exclusive launches on e-commerce platforms during the festive sales. Xiaomi and Sanyo were two such channels, which launched their TVs exclusively for online buyers. By exclusively selling online, they could save cost and pass on the benefits to the customers.

“In fact we had expected at least 20 per cent growth this time as the government had brought down the GST slab for consumer durables from 28 per cent to 18 per cent. Apart from the e-commerce channel, the rupee-dollar movement also hit sales,” said Eric Braganza, president, Haier Appliances India.

According to Nandi, higher crude oil prices increased the cost of transportation, while volatility in the equity market and food inflation also affected sales. After a flat first half, he expects single digit growth of 5 to 6 per cent for the industry for the entire year.