Amazon sees discretionary spending coming back | Economic Times

Bengaluru: Amazon India is expecting discretionary spending by consumers to make a comeback during the festive season, a top executive told ET. While electronics will continue to dominate in terms of value of products sold during the festive season, Amazon expects to see a resurgence in demand for fashion, home and kitchen products and large appliances, Manish Tiwary, vice-president of Amazon India, told ET in an exclusive interview. Tiwary heads the company’s consumer-facing business in India and recently took over its seller services portfolio as well. The assessment comes following nearly six months of sales dominated by need-based pent-up demand categories such as grocery, work/study from home essentials, personal grooming and fitness products.“As we get into Diwali... electronics will continue to be the largest value business for us, but we still believe that in terms of units (sold), fashion and some of our home and kitchen businesses will be much bigger,” Tiwary said. “Current trends (of working from home, study from home) will continue, but what would get added would be a tinge of celebration. I think even consumers are looking for a little bit of change,” he added.During this year’s festive season sales, three big online platforms – Amazon, Flipkart and new entrant Reliance – are expected to dominate the fight for market share. As a slew of local shops and physical stores set up their online presence to garner sales amid the Covid-19 pandemic, the overall selection for customers on online platforms is also likely to increase. Amazon, for instance, said over 18,000 offline stores have registered on its platform since May. New seller signups overall, too, have shot up by 60-80% as offline retail sales recovery continues to lag.Market tracker RedSeer Consulting said last week it estimates the ecommerce sector in India to touch $7 billion in goods sold in the month leading up to Diwali, driven by ecommerce cannibalising offline sales, along with high growth in the online customer base this year. Tiwary did not comment on Amazon’s sales expectations. “GMV is not a metric I even think about…Whenever we look at any performance, we try and break it up into - are we getting new customers? Are customers finding value? ...If a customer has shopped once, do we have offerings that make him/her shop two-three times, and across categories? That is our framework,” he said.Amazon has received a boost from its Prime service, he said, due to increased signups because of its video and audio offerings during the pandemic.“This highly-engaged customer base is now looking to venture into buying different categories, including grocery, during the upcoming sales,” he said, adding that minus a few categories like luggage, all categories have seen far higher engagement. Amazon Prime is a paid subscription programme from Amazon.Grocery grows quicklyTiwary said that grocery has beaten other categories in terms of growth during the pandemic, which is acting like a gateway for new and infrequent Amazon customers to explore the purchase of products in several other categories. “Pantry is focused more on the value shoppers for weekly or monthly stock-up of dry grocery...while Fresh is more about the focus on perishables and speed. We believe that none of us shop exclusively in one format,” he said. Earlier this month, Bloomberg reported that Reliance Industries had offered to sell a stake worth $20 billion in its retail business to Amazon. This came soon after Reliance Retail bought several of Future Group’s businesses, including Big Bazaar, Easyday, and Foodhall, in a ₹24,713 crore deal.Commenting on the sale, Tiwary said it “is not something which would impact the way we would run the business.” Amazon had acquired a 49% stake in Future Coupons, the promoter entity of Future Retail, last year for around ₹1,500 crore.Tiwary also termed concerns over growing competition as “hype”. “There are various grocery numbers depending on which study you look at. But these are $500-600 billion businesses if you include staples and loose grains. Ecommerce wouldn’t even add up to a decimal point,” he said, adding that competition is not going to make the company behave differently.