With Flipkart reaching GMV of $1 billion, Indian e-commerce industry is gaining significant grounds. The industry is much younger and smaller compared to the American or Chinese market, and has gone through several ups and downs. Even last year proved to be challenging with funding drying up and many players having to shut shop as a result.
However, players such as Flipkart and Snapdeal have managed to stay atop the highs and lows. E-commerce is a fragile industry and depends heavily on customer retention. While customer acquisition is an expensive affair – some players are losing money on each customer acquired till date – retaining that customer and ensuring his/her return for a second purchase is even tougher.
Sectors such as FMCG, BFSI and automobiles are just testing waters with digital advertising, while e-commerce players are spending large chunks of their marketing budget on digital. Recently, GroupM released its latest advertising expenditure report, titled ‘This Year, Next Year (TYNY) 2014’, which pegs digital media spends with the highest rate of growth at 35%. As e-commerce is the largest spender in digital advertising, experts opined that this sector will drive the growth of digital ad spends going forward.
Traditionally, offline marketing and TVCs have been the primary source of attracting customers and digital is a supporting tool to engage with audiences. Praveen Sinha, Co-founder and MD of Jabong.com pointed out that it’s the other way around for retailers. “Digital marketing offers effective transactional economics. Offline media, by their very nature, do not translate into transactions in the same way. However, they help in building brand recall and thereby improving the conversions of other channels as well as increasing direct traffic and branded keyword searches,” he said.
Digital marketing trends
While social media is consistently on top recall for branding, the e-commerce players shared some other trends that they are seeing. According to Rajiv Srivatsa, COO & Co-founder, Urban Ladder, apart from the usual suspects Twitter and Facebook, other social media tools are also becoming increasingly popular for content discovery. “Instagram, Pinterest, YouTube, blogs etc., are becoming increasingly popular and will contribute a lot to brands in the coming future,” he said.
Deepa Thomas – e-commerce Evangelist, eBay India, stated that mobile is the next big thing for etailers. “Mobile is becoming an integral part of digital advertising and strategy, owing to increase in Internet consumption over smartphones. Digital natives are playing a very crucial role in evangelizing Internet, social media and online shopping to their older members of their family and friends,” she said. She added that eBay India is seeing 24% of its traffic coming from mobile devices. With all the etailers pushing their apps, mobile does seem to be the next big play. The coming of 3G coupled with cheaper smartphones changed the picture a while back, and with 4G coming into the picture, the penetration of Internet via mobile phones will only grow further.
Sinha from Jabong added that multi-channel marketing is the new thing. “It allows you to cross-leverage the data points from different channels and develop a holistic marketing strategy,” he said.
What makes digital marketing click for e-commerce?
While the biggest reason is that these are online companies and need a platform that can generate into real-time leads, there are reasons why it works better for them. While Srivatsa stated that it makes sense for customer acquisition, the other experts differed by saying that digital channels, especially social media is for brand building.
“The economics of digital marketing are such that it makes sense largely for customer acquisition. TVC and Newsletters work better for building brand recall. Some exclusive properties like YouTube pre-rolls and Facebook logout have also been effective in building brand recall,” Srivatsa added.
Building top of the mind recall is of utmost importance in this overcrowded sector, which is why digital medium fits the bill. The usual SEO, SEM and CRM do the needful and platforms like social, display, video, content, blog and mobile prove to be extremely strong platforms for building brand preference and brand referrals.
Getting more out of fans and followers
Everyone is asking what do these brands do with their huge fan following on social networking platforms. Are those fans limited to brand engagement or is lead generation possible via that channel? While Srivatsa shared that Facebook is one of the biggest sales channel for them, Deepa and Sinha shared that it is more of a platform to launch new products and features and engage with the buyers. “We constantly engage with our followers to generate positive word-of-mouth, get our followers to review new products (research lab), and also preview new launches,” Deepa said.
Be it the big names like Flipkart or Snapdeal or newer players like DoneByNone, social media – especially Facebook – is becoming increasingly relevant for each one of them. While as of now the interaction with Facebook fans is more on the side of engagement, announcements and feedback, the day is not far when commerce will actually start happening via Facebook.
It is not only the fashion and lifestyle etailers who rely heavily on digital marketing. OTAs like MakeMyTrip, Cleartrip, Yatra and Ixigo also depend on digital marketing for a major chunk of their business. It will be of interest to see how they have actually changed the face of digital marketing and evolved more channels for converting more consumers.