Festive Online Sales Disappoint: Brands Cut Ad Budgets 40 Percent

Posted on 22nd Oct 2026 12:08:20 in Business, Digital Marketing

Tagged as: festive e-commerce India, D2C brands, quick commerce advertising, online sales, small business marketing

India's biggest online shopping festival has opened on a softer note than brands budgeted for. Gross merchandise value across e-commerce platforms in the first four days of the festive sales, from October 7 to 10, came in at Rs 29,800 crore to Rs 30,900 crore against Rs 33,200 crore in the same period last year, according to e-commerce consultancy Datum Intelligence. That is a 7 to 10 percent year-on-year decline, and it has triggered a visible change in how small and mid-sized brands are spending on advertising.

Instead of bidding harder for visibility, many direct-to-consumer (D2C) brands have cut marketing budgets, trimmed discounts and moved money towards their own websites. Founders interviewed by Moneycontrol described sales that were still growing year-on-year but falling 30 to 40 percent short of the projections their inventory and ad plans were built on. Logistics data points the same way: online delivery dispatches through the first 10 days of Amazon's Great Indian Festival and Flipkart's Big Billion Days ran 10 to 12 percent below the year-ago period, The Economic Times reported.

A Slower Opening, and the Reasons Behind It

The immediate cause is electronics. Smartphones and laptops have traditionally carried a large share of festive GMV, and their prices have risen 30 to 40 percent over the past few months as memory and component costs climbed. Counterpoint Research estimates smartphone unit sales fell 16 percent year-on-year in the early part of the 2026 festive period. Datum Intelligence expects smartphones to account for about 30 percent of festive GMV this year, down from 35 percent, with mobile sales growth slowing to roughly 6 percent from 26 percent in 2025.

There is also a calendar effect. Last year, GST rate cuts took effect on September 22 and landed just as the big sales opened, which pulled forward big-ticket purchases. There was no comparable trigger this year. Add September consumer price inflation at 5.54 percent, near a two-year high, and shoppers are simply more careful with large purchases.

The picture is not uniformly weak. RedSeer Strategy Consultants estimated roughly USD 2.5 billion (about Rs 24,000 crore) of GMV across October 8 and 9, with 8 to 9 crore orders and 60 to 65 million shoppers. Fashion GMV grew 22 to 25 percent year-on-year in the first two days and accounted for 15 to 18 percent of sales. Consumer electronics and appliances are projected to grow 26 percent and 35 percent respectively. In other words, the basket is getting wider even as the average ticket gets smaller, and much of the value growth that used to come from phones has gone missing.

Amazon, for its part, said visits during the opening phase of the Great Indian Festival crossed 440 million, its highest ever, with more than 72 percent coming from beyond the top nine metros. The company said sellers recorded more than double the units ordered in the first 24 hours compared with last year, and that the number of sellers crossing Rs 1 crore in sales in that window grew more than 80 percent year-on-year. Brand-level data tells a more uneven story: home and personal care brand Beco told ET that sales started at about 4.5 times business-as-usual levels and then tapered to 1.7 to 1.8 times over the following days.

Why Ad Budgets Are Being Cut, Not Raised

The cost of being seen has moved faster than the cost of goods. Quick-commerce advertising rates have climbed 30 to 40 percent year-on-year, against a normal festive increase of 15 to 20 percent, according to brand founders and Datum Intelligence's 2026 Festive AdEx report. Datum estimates quick-commerce advertising spend by brands will rise about 50 percent to roughly Rs 2,200 crore this season. That is a lot of money chasing the same shelf space, and it changes the arithmetic for anyone without a large balance sheet.

"We had planned a certain advertising budget but we have scaled it down by almost 40-50 percent because costs were shooting up and the campaigns were not converting," Sagar Awatade, founder of oral healthcare device brand Oracura, told Moneycontrol. Awatade said the brand is growing over last year but is running 30 to 40 percent below its own projections, which means the inventory and advertising planned around those numbers now has to be unwound carefully.

Input costs are squeezing from the other side. Toy brand Kidara Toys has seen input costs rise around 20 to 25 percent, co-founder Shyam Dhanuka said, driven by currency depreciation and supply disruption linked to the Iran conflict. The company's response has been to limit advertising that does not drive sales and to avoid passing on the entire cost increase at once. A logistics executive told ET that shipments are up around 10 percent this festive season, well below the 18 to 20 percent clocked last year, and that the large marketplaces have themselves been more cautious about spending to push sales events.

The discount lever has also been pulled back. Average discounts during this year's festive sales are 35 to 40 percent lower than last year, according to brand founders and executives quoted by ET. For a shopper comparing a phone that costs 30 to 40 percent more than it did a few months ago and is now carrying a smaller discount, waiting is a rational choice. For a brand, discounting deeper to force volume at a higher input cost is a fast route to a loss-making festival.

What Brands Are Doing Instead of Discounting

The most common move is a shift in the mix rather than a cut in ambition. One D2C toy brand founder told Moneycontrol the company will cut back on festive discounting this year, aiming to hold at least a 5 to 10 percent margin: "We would rather sell fewer units than sell at a negative margin." That single sentence describes the mood across much of the sector.

Others are reworking price architecture. Snack brand Munchilicious raised the maximum retail price while keeping discount percentages unchanged, and is pushing packs of two and three so that higher order values absorb fulfilment costs without a deeper percentage cut. Founder Devang Daya said the brand is seeing around 10 percent year-on-year growth in online sales across Amazon and its own D2C website. Multipacks, bundles and pack-size changes are old tools, but they are cheaper than a 40 percent spike in ad rates.

Some brands are also questioning whether quick commerce deserves the same budget it got last year. A snacking brand founder told Moneycontrol that inventory replenishment issues at Blinkit and churn in category and point-of-contact teams at Instamart made returns hard to track, and that being asked to commit Rs 2 to 2.5 lakh a month for a dedicated point of contact at Instamart without clarity on deliverables pushed the company to move that money into its own D2C channel instead.

Not every category is struggling, and the differences are instructive. Lahori Zeera founder Saurabh Munjal expects around 50 percent year-on-year growth without leaning on discounts, with quick commerce growing 300 to 400 percent from a small base. Pilgrim founder Anurag Kedia told ET the beauty and personal care brand has grown 70 to 80 percent year-on-year across channels this festive season, with some quick-commerce platforms delivering 5 to 6 times last year's sales. Categories that suit ten-minute delivery, and brands whose demand is established rather than discount-dependent, are still finding growth. Large advertisers are behaving differently too: Parle Products has raised advertising and promotion spending 8 to 10 percent, with digital within that rising 10 to 12 percent, chief marketing officer Mayank Shah said.

A Practical Checklist for Small Sellers

For a small seller with a limited budget, the lesson is not to stop advertising but to stop advertising blind. A few operating rules follow directly from what the data shows.

• Track return on ad spend platform by platform, weekly. If campaigns are not converting at the current cost per click, cutting the budget is a decision, not a defeat; Oracura's 40 to 50 percent cut is a working example of reallocating rather than exiting.
• Price before you discount. Raising MRP modestly while holding the discount percentage, or moving to multipacks, protects margin better than a headline percentage-off sale that trains customers to wait.
• Separate visibility spending from performance spending. Sponsorship slots and listing auctions on quick commerce buy presence; they do not guarantee conversion. Fund them from a fixed, capped pool.
• Do not ignore smaller cities. Amazon reported that over 72 percent of its opening-phase visits came from beyond the top nine metros. If your catalogue is priced for metros only, that traffic is being wasted.
• Use the longer calendar. Dussehra fell on October 20 and 21 and Diwali is on November 8, with Karwa Chauth on October 29. Demand is spread over more weeks than last year, which suits brands that can keep stock and creative ready rather than blowing the whole budget in week one.
• Keep a first-party list. Every order that comes through a marketplace or a quick-commerce platform is a customer you cannot re-market to directly. Email, WhatsApp opt-ins and repeat-purchase offers lower the cost of the next sale.

The Second Half Is Still Open

Analysts still expect overall festive e-commerce sales to grow 25 to 30 percent this year, on the argument that spending is being spread across more categories and more days rather than concentrated in the opening stretch. RedSeer expects around 100 million shoppers to buy during the 11-day first leg of the sales. The brands that come out of this season in good shape will be the ones that treated the opening week as a measurement exercise rather than a referendum, and adjusted budgets and prices while there was still time to act.

For India's small sellers, the festive season has stopped being a discount war and become a margin test. The winners will not be the brands that spent the most to be seen. They will be the ones that knew what each rupee of ad spend returned, priced for the cost base they actually have, and kept a direct line to the customer once the sale banners came down.

Sources

• Moneycontrol — D2C brands see muted festive sales as rising input, ad costs squeeze margins (October 19, 2026)
• Moneycontrol — Quick-commerce ad rates squeeze D2C brands, eat into festive discounts (October 6, 2026)
• Moneycontrol — Festive e-com sales fall 10% YoY to Rs 30,000 crore in four days (October 12, 2026)
• The Economic Times — Ecommerce festive sales fizzle out on price pangs (October 19, 2026)