E-retailers are introducing wallets and new affordability options to increase the usage of online payment methods during this festive season.

E-commerce giants bank on easy digital payment offers to crack festive sales
Atom E-commerce Tuesday, October 09, 2018 - 18:21

Battle lines have been drawn and the field is set for the biggest fight of the year in the e-commerce industry. Every year, ahead of (and during) Dussehra and Diwali, India sees its e-commerce companies rolling out a range of discounts and offers across their product categories. Every year, the sale gets bigger, discounts get higher and the product range gets wider. In fact, this period brings in nearly 10% of all e-commerce revenue in India.

For the 2018 edition of the e-commerce festive battle, Flipkart expects to generate gross sales of nearly $1.5 billion, which is nearly double the last year. Customer adoption too, is growing. Redseer, a market research firm, expects the number of online shoppers to grow at a CAGR (compound annual growth rate) of 28% to reach the 120 million marker by 2020.

This year, a new theme has emerged. Going beyond the usual discounts and cashbacks, e-commerce companies are taking to affordable payment instruments and offers to bring more customers to the platform. They are applying a simple logic - if they cannot afford to pay for something, give it on credit and let them pay back later.

While until now, it was usually additional discounts for customers of specific banks, cashbacks, no-cost EMIs on certain credit cards, e-commerce companies are now trying to get innovative in making shopping online affordable. Flipkart reportedly expects to add nearly 2 million new shoppers through affordable payment instruments this festive season.

“Wallets and new affordability options introduced by the e-tailers will also increase the usage of online payment methods during this festive season,” Redseer said in its ‘Pre-Diwali Festive Sales – Customer Perspective’ report.

Both Amazon and Flipkart have launched card-less EMIs for customers. Amazon has launched Amazon Pay EMI, which offers no-cost EMI for three to six months and offers credit up to Rs 60,000. The idea is to enable credit access for every Amazon customer. Apart from Amazon Pay EMI, Amazon has also expanded EMI on Debit cards, to now include customers of HDFC Bank, Axis Bank and ICICI Bank.

“Customers can save more while shopping and not feel constrained by budgets this season. Our programmes such as Amazon Pay EMI, no-cost EMI on Debit and Credit cards and Exchange will make shopping on Amazon.in even more special and valuable. In fact, our new campaign ‘Great Indian Festival Band’ has been built around the insight that budget always comes in the way of happiness,” an Amazon spokesperson said.

Flipkart too, followed suit with a similar offering. It launched ‘Cardless Credit’, which will allow Flipkart customers to get an instant credit line of upto Rs 60,000 based on scores derived from customer behaviour on Flipkart. On check out, customers can either opt for 'Pay Later next month' or EMIs of three to 12 months. Users will have to pay it back by 15th of the following month.

According to Gagan Goyal, a partner at India Quotient, the new payment offers will serve as a huge boost in bringing in more customers. “Many people who have aspirations to buy better things cannot do so because of the price. With such offers, it helps them pay in instalments and they can meet their aspirations. When new users especially come to an e-commerce site, such options will push them to shop there. I see these offers being of great benefit to users,” he added.

While Ankur Bisen of Technopak agrees that it will help customers make high-ticket purchases, his reading is that these affordable payment instruments are not to chase new customers but to give existing customers more incentives to buy big value items.

“I don't think festive season is when they reach out to the new audience; it is about existing audience and giving them more options to come on their websites and shop. A Festive season is when we shop for white goods like home appliances and electronics, and to purchase this, customers usually look for retail destinations that can offer EMI options,” he says.  

However, what will be interesting to see is customer adoption. According to the Redseer report, 77% of online shoppers use some form of online payment while shopping. However, only 13% of customers surveyed by Redseer claim to be aware of payment offers such as Debit card EMI, while only 9% of the respondents are willing to try the new payment method.

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