High-End Hype: E-commerce Sales Rise 24% In Q2, Fuelled By Premium Products

E-commerce sales volumes have risen by approximately 24% in the second quarter of the year, according to data from Unicommerce, a warehouse solutions provider specialising in e-commerce. This figure, however, doesn’t include smartphone sales.

What Happened? Per an Economic Times report, the second quarter’s 24% growth follows a slower-than-anticipated increase of 16% in the first quarter. While sectors such as pharmaceuticals and eyewear have experienced robust growth, a slowdown in online sales of inexpensive items across various categories like fashion and appliances has been observed. This slowdown impacts the overall volume growth for e-commerce platforms, even as demand for high-value items compensates for the decrease in volume.

Unicommerce data reveals that health and pharma, eyewear, and fashion and accessories saw growth rates of over 47%, 30%, and 24%, respectively, during the second quarter. However, this may not reflect the overall trend, as the growth appears to be primarily driven by premium product purchases, particularly in the electronics sector.

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Ashish Dhir, Executive Vice President (Consumer and Retail) at market research firm 1Lattice, noted that sluggish spending by rural consumers and the urban poor over the past six months has negatively impacted both offline and online retail.

In the broader electronics segment, smartphone sales, which account for about a third of sales, saw a 20% decline in sales volumes from January to June this year, according to Neil Shah, Vice President of Research at Counterpoint.

An e-commerce executive expressed concern over the slowing sales of low-value items, despite high-value products currently driving growth in online retail. They noted a decline in sales for products priced below ₹500 in the fashion sector, while more expensive brands have performed well. The executive suggested that the industry needs to observe how this trend develops throughout the rest of the year.

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