Festive e-commerce may hit Rs 1.55 lakh cr, but margins dip

India’s festive season is off to a strong start, but the early numbers tell two stories at once. Volume is climbing across e-commerce and stores, yet the costs that accompany that demand—raw materials, freight, packaging and the discounts used to close sales—are quietly squeezing what companies actually keep.

01 · What the early festive data shows

Online platforms recorded an estimated Rs 24,200 crore in gross merchandise value in the first two days of festive sales on October 8 and 9, according to Redseer Strategy Consultants. Mobile phones led the basket by value, and roughly two-thirds of shoppers came from Tier II cities and rural markets.

Datum Intelligence projects online festive sales of Rs 1.50–1.55 lakh crore this year, up 25–29 per cent from Rs 1.2 lakh crore in 2025. Shopper numbers are expected to grow 14.5 per cent to 158 million, but average order value is forecast to dip 1.5 per cent to Rs 1,554.

Among 2,000 online adults surveyed by Datum, 72 per cent said they planned to spend more this festive season. Yet 57 per cent cited deals and discounts as a reason to shop, and 51 per cent pointed to affordable EMIs—up seven percentage points from the previous survey. In short, demand is real, but it is heavily discount-led.

02 · Pockets of real demand

The momentum is visible outside pure e-commerce. Haier India reported more than 30 per cent year-on-year sales growth in the first three days; Wonderchef grew around 20 per cent, led by premium products. Parle Products’ packaged food sales rose 45–50 per cent, driven by mid-sized and large packs, while quick-commerce bill values in urban areas were up 15–20 per cent and smaller towns brought in first-time buyers.

Mahindra & Mahindra is betting on new launches, product refreshes and GST-led affordability, while Škoda Auto India has raised prices by up to 1.2 per cent, capped at Rs 20,000, to manage rising input costs without abandoning festive demand.

03 · Why the bottom line is under pressure

ICRA expects operating margins for its sample of 2,756 listed companies to contract by 100–150 basis points year-on-year in Q2 FY2027, even with revenue growth in the low to mid-teens. That follows a 171-basis-point contraction in Q1. The pressure is broad but uneven:

• FMCG: higher palm oil, tea, coffee and sugar prices, plus packaging and logistics costs tied to crude oil.
• Automakers: exposure to steel, aluminium, rubber and precious-metal prices.
• Apparel: higher raw-material, wage, logistics, rent and promotional costs.

ICRA’s Kinjal Shah expects companies to follow a “calibrated, category-specific pass-through” that protects volume and competitive position while temporarily absorbing part of the increase.

04 · The pricing playbook for a value-conscious buyer

FMCG players are leaning on selective price hikes, grammage reductions and product-mix improvements. Trent’s Umashan Naidoo described the retailer’s “first price, right price” approach—getting the opening price right rather than depending on promotional cuts. In apparel, a CMAI survey found 52 per cent of members expected sales to rise, but 54 per cent said they were carrying higher input costs through lower margins, and only 35 per cent had raised prices.

Ajit Mishra of Religare Broking expects consumer durables, passenger vehicles, premium two-wheelers, organised retail and e-commerce to gain stronger traction, while mass FMCG, entry-level two-wheelers and value-oriented discretionary categories stay subdued. Kotak Mutual Fund’s Devender Singhal cautioned that “sales growth could outpace profit growth,” while Anand Rathi AMC’s Neeraj Gaurh called festive discounting a “double-edged sword”—promotions can drive revenue but higher acquisition and marketing costs can erode the gain.

Source: ETBrandEquity.com

Mad About Marketing Desk The strategists and writers at Mad About Marketing, writing up what we see in the work every week.