Diwali has been turning out to be mega revenue churn for e-commerce companies in India over the past three years. Amazon and Flipkart have been fighting fiercely to dominate larger market share during the festive sale that happens around Diwali.
According to a Redseer estimate, about 10 per cent of overall e-commerce annual revenue comes from Diwali sales. Ramping up themselves for the busiest time of the year, Amazon had announced credit line up to Rs 60,000 to customers yesterday.
Within a day of Amazon introducing EMI through Amazon Pay, Flipkart has launched cardless credit programme akin to Amazon. It would offer an instant credit line of up to Rs 60,000 for consumers.
Factoring credit history and previous shopping patterns, customers eligibility for credit line would be evaluated by Flipkart. Borrowers can pay the outstanding amount either in one time or through monthly installment (EMIs).
While details about its lending partners yet to be known, it’s likely to partner banks as Amazon did with HDFC Bank, ICICI Bank, Citibank for offering credits to customers. It’s worth noting that Flipkart had introduced equated monthly installments (EMIs) on debit cards.
Amazon and Flipkart are offering credit to customers as a large base of their consumers don’t have access to the credit card. Meanwhile, it’s cumbersome to seek credit from banks and financial institutions.
Given that 20 million shoppers are expected to buy during the festive season, both see an opportunity for driving sales through credit facility during the festive period.
Apart from the microcredit option for buyers, both e-commerce marketplaces have been planning to obtain NBFC licence for consumers as well as merchant ecosystem. Last year, both had expressed interest to enter lending business meant for sellers.
Introduction of the credit line for consumers looks like a well-timed move from Amazon and Flipkart as consumers tend to buy in bulk around Diwali. In along run, such features could be pivotal in driving frequent purchases.
The development was reported by ET.
