Amazon and Flipkart go head to head next week. One has a lot to prove.

For Flipkart and Amazon, it’s about who blinks first. Photo Credit: undrey / 123RF.

Every year around this time, Indian ecommerce goes into a tizzy as leading online marketplaces announce their yearly carnival – the season of mega-discounts.

Amazon, Flipkart, and Snapdeal are now standing on the brink of what analysts think could be a defining point for the country’s online shopping industry, as discounts go down and sales somewhat flatten. More so for Flipkart, which could see a make-or-break season this year.

“Discounts will be down by at least 20 percent in most categories. That (will) pull back sales a bit,” said Ashish Jhalani, founder of research firm eTailing India.

The festive season in India begins around October and culminates in Diwali. The days in between are considered auspicious for making purchases, driving sales of big-ticket items like furniture, home appliances, gadgets, and jewelry.

Ecommerce players could look at business worth as much as US$12.8 b this festive season

For any retailer, the festive season accounts for almost a third of their annual sales. Some analysts say that could be as high as 40 percent for online retailers.

Given that the Internet and Mobile Association of India expects the ecommerce market in the country to be worth about US$31.5 billion by December, one could infer ecommerce players are looking at business worth as much as US$12.8 billion this year.

For the past few years, Amazon, Flipkart, and Snapdeal have ridden the holiday wave on the back of massive discounts to claim eye-popping numbers that really mean nothing. Surrounding media frenzy fed into rhetorics of “crazy offers”.

Photo Credit: dolgachov / 123RF.

A 2015 report by Goldman Sachs said about 30 percent of an Indian ecommerce company’s expenses were geared towards discounts, second only to the 65 percent that went in warehousing.

This year, Amazon India announced it would host its Great Indian Festival from October 1 to 5, pat on top of Flipkart’s Big Billion day sales, which is being held from October 2 to 6, setting them up for a major showdown. Amazon and Flipkart have locked horns last year, but the stakes are higher now than ever before.

Snapdeal’s sales too start October 2. The company has invested in an entirely new rebranding campaign to go with, as it tries to gain back lost ground.

Flipkart’s moment of truth

Down with the discounts