Face-to-face dwarfed e-commerce retail; debit spends see growth: Visa report

Visa, American multinational financial services corporation, has revealed a multi-faceted Diwali-centered Indian expenditure report based on data collected over 2016, 2017 and 2018. The report highlights some key findings in the study, giving some crucial insights into different aspects of daily consumer expenditure habits in India. The study, carried out by Visa, primarily focussed on spends in the week leading up to Diwali.

Some of the facets that the report expounds on are — Face-to-face retail's hegemony in transactions opposed to e-commerce's steady penetration in the Indian market, credit versus debit transactions, categories that have seen most spends, and the spike of expenditure during the Diwali week compared to regular days.

Face-to-face versus e-commerce

India harbours a humongous internet user base, in fact the second-largest in the world with 475 million users as of July 2018. And by its virtue, the e-commerce industry has seen a significant growth in the Indian market, reaching an evaluation of USD 38.5 billion in 2018 as opposed to USD 24 billion in 2017, according to Business Standard.

But, contrary to popular notion, face-to-face retail still towers over e-commerce in India. According to the report, India has seen an average year-over-year spends growth of 106 per cent during Diwali week, with an upward growth of eight per cent for the online spends (e-commerce). But even with such favorable numbers, face-to-face retail has seen twice as much transactions. 66 per cent of total spends in 2018 were recorded at physical points of sale.

Credit spends versus debit spends

For Diwali 2018, credit performed comparatively better in five cities of India (Delhi, Mumbai, Bengaluru, Hyderabad and Chennai), while retail in other cities predominantly saw debit transactions. According to the report, Delhi saw the most face-to-face credit spends during Diwali 2018, followed by Mumbai and Bengaluru. However, Mumbai topped the list of cities in debit spends followed by Delhi and other cities. Smaller cities such as Chandigarh, Pune and Coimbatore have higher debit penetration by spend at 57 per cent, 60 per cent and 64 per cent respectively.

Average year-over-year debit growth is significantly more than credit growth. While credit spends have shown a growth of 44 per cent, debit spends have shown a staggering 68 per cent growth.

Categories with most spends

For face-to-face spends in Delhi, Mumbai and Pune; apparel, jewellery and food and grocery topped the list of categories. While in Kolkata the charts were led by jewellery. Generally, during the festive season, jewellery as a category witnesses an overwhelming expenditure, followed by home improvement, apparel and accessories and electronics.

Diwali week spends

With major e-commerce companies and other offline outlets offering special deals during Diwali, the rise in sales and therefore expenditure is understandable. According to Visa's Diwali report, consumer spends during the week leading up to Diwali are twice more than the consumer spends on regular days.

This is substantiated by Visa's data for 2016, that showed how the week leading up to Diwali saw 2.2x more spends compared to regular days. While in 2017 and 2018, the Diwali week saw 2x more spends. The comparative analysis of the data collected over three years also shows that Diwali Week spends have seen a year-over-year growth of 56 per cent, while the transactions have seen the average year-over-year growth of 106 per cent.