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An employee of Amazon walks through a turnstile gate inside an Amazon Fulfillment Centre (BLR7) on the outskirts of Bengaluru, India.Reuters

India's economic slowdown is now expected to trickle down in almost every aspect. As per a report by market research firm Kantar, consumer spending on e-commerce websites is down by one fifth in the first six months of 2019. Two major reasons which Kantar has highlighted is the sluggish growth of the economy and discounts slashed by etailers. However, Kantar is expecting a turnaround in the coming month's thanks to festive season where the e-commerce players generally witness significant growth in sales.

In comparison to the first six months of the previous year, the average ticket size has tanked 27 percent. Meanwhile, average spending is also down 21 percent, as reported by a financial daily, the Economic Times. Hemant Mehta, MD (insights division), Kantar said, "The overall economic slowdown is reflecting in consumer sentiment with respect to online shopping. Consumers seem to be cautious and taking their time before making purchases."

Mobile phones and fashion are the two major segments that have registered a steep fall. Mobile phone sales witnessed a 17 percent fall while fashion sales tanked 16 percent in contrast with the previous year. IT industry body Nasscom estimated that India's e-commerce market was worth $38.5 billion in 2018-19, vis-a-vis $33 billion in 2017-18 with Amazon and Flipkart driving bulk of volumes.

Amazon and Flipkart

The report added, "Once considered recession-proof, online shopping has experienced a dip in H1 2019, in terms of buyers and spends." The dip was witnessed due to change in pattern mainly driven by discount cuts which nearly halved between 2018 and 2019. Major e-commerce players were bound to slash discounts after certain point said Paula Mariwala, founder of Stanford Angels, which invests in startups. "Banks and NBFCs (nonbanking finance companies) have been reluctant to give credit and you're seeing that here as well. A major portion of customers in India had found access to premium phones and fashion through EMIs (equated monthly installments), and now that layer has been peeled away,'' she said.

However, Flipkart and Amazon has refuted the report and have argued that they are registering a healthy growth. Flipkart's spokesperson said, "At Flipkart, we've been seeing good growth. As a value player in the e-commerce marketplace, we continue to bring lakhs of sellers across the country to over 150 million consumers pan India. We continue to remain very excited with the growth that we are seeing, especially in the upcoming festive season." In fact, Amazon claimed that its contribution of phones more than Rs 15,000 had increased significantly in the past two quarters. The company said, "Our customers continue to show a strong response to the great offers from our brand and seller partners, including those for premium smartphones."