Digital large and growing part of our total marketing investment: Ravi Desai, Amazon India
Globally, Amazon reported a whopping 132% YoY growth in its advertising business in Q2 2018; earned $2.2 billion from the ad business in comparison to the $945 million it made from the business in Q2 2017
Published - 03-October-2018
With customers today enjoying both, a one-stop-shop platform available online along with the convenience of home delivery and a tangible touch and feel experience of products before making purchases in physical stores, it is vital to weigh both sides of the spectrum. Seems like it’s no longer brick and mortar vs online retail as retailers are looking to unify their channel strategies and build a hybrid-model that has the best-of-both-worlds approach.
In an interview with exchange4media, Ravi Desai, Director, Mass and Brand Marketing, Amazon India, spoke to us about Amazon’s first ever ‘Festive Home’ a physical store like arrangement in Delhi, where in the brand positioned itself as a one-point shopping destination for all of consumers’ festive and household needs this Diwali. The offline arrangement of Amazon’s Festive Home showcased different themes and décor items, electronic appliances, fashion collection, washroom accessories etc. Stating digital as the core part of Amazon’s business model, Desai also spoke about their need to go offline. According to him, their offline approach would make it easier for users to tangibly experience the breadth of Amazon in terms of the sheer selection of products that has been put together for customers. Excerpts:
Amazon is primarily an online retail brand, with concepts like the Festive Home, why is the brand now looking at an offline presence as well?
The thing with online is that at times you don’t get the feel of the breadth of the entire product range available, because you are literally going in product by product, on the site. Hence, when we shared pictures of Amazon’s Festive home with few people, we found out how our layout of every item in this 'home' is helping our consumers understand the entire catalogue of products, which is coming out of one store, i.e. Amazon.in. This concept brings alive the fact that customers have access to 170 plus million products on sale available on the site. Our festive home this year clearly symbolises how consumers can literally decorate every single person’s room in the family using Amazon products.
In order to create both brand love and business in the market, is it necessary for brands to have an online as well as an offline presence?
This is a new habit as far as India is concerned. An offline presence like that of a Festive home, which we built in 21 days, makes it easier for us to connect with consumers, as they can actually interact with someone who they think represents Amazon.
Also for e.g. Amazon Udaan stores, these are points where customers can actually walk up as a new user and take help in opening up an Amazon account or in terms of ordering items. Today, there are quite a few Udaan points, which have deliveries happening at their end. So as far as the new customer is concerned, there is a physical entity nearby where they can actually reach out for any kind of help or query. It’s also a matter of time where in the initial stages, people might hesitate, but over a period of time and with experience consumers begin to trust the brand in their journey. They realise the kind of value we offer both in terms of selection, pricing and convenience. All of this results in building a level of comfort with the brand following which consumers invest more time in the brand.
Is customer acquisition easier in offline vs an online medium? Has the consumer experienced change in this journey?
The offline concept helps us to add another touch point in the consumer journey. However, the offline touch points again have a limited scale as we can have 4-5 such Amazon Festive Homes at max, whereas the site is accessed by millions of Indians today. It also depends on who the customer is and what kind of journey they have already had. With Internet per se and online commerce like Amazon, we are observing how more than 85% of the customers today come from tier- II & III cities, who haven’t spent much time on the Internet. So for them their online journey is probably in its second or third year both in terms of what they do with it and what the Internet can do for them. This is the biggest determinant of how comfortable they feel with shopping online. According to our study, while people in small cities had access to products of few brands that they had heard of, those brands on the other hand did not experience a demand high enough in order to set up stores in those cities. With clearly no physical stores available, having access to those brands through Amazon and the Internet is actually an eye opener for the tier-II and III city consumers.
How is Amazon targeting Tier-II and Tier-III cities?
From Tier-II and Tier-III cities we are expecting to receive huge demand especially from new customers. The selection available in Amazon’s Hindi app caters to customers living in metros like Delhi and also those in areas like Lucknow. As far as media is concerned, Television, print, Out of Home, radio and digital, innovations around on-ground event etc. are being invested in to spread the word around the campaign across cities.
What is the revenue split like in offline and online form of retail and how is Amazon finding a balance between both?
For us from a marketing standpoint, the north-star metric is about making more and more customers aware of Amazon. Our aim is to get them to know all about Amazon in such a way that they are compelled to try us. The fact that they have placed their first order online is where the awareness translates into business. Thereafter comes the comfort that they get with that experience. Their ability to access the selection then takes over and gets them into a sense of repeat habit of buying more categories online and test out products more frequently. We are also thinking of some ideas on how Diwali can be made more special for our prime members.
How is Amazon spending on digital ads. With the concept of brick & mortar stores what other ad spends are being involved?
Digital is a large and growing part of our total marketing investment. It is a core part of our business model itself. We have experienced a lot of success in the last one year through digital. Our investment in digital is primarily about getting our consumers to be comfortable on the Internet and thereafter make the first attempt at buying online.
Coming to other ad-spends, for this particular campaign around Diwali, we have already started with our inputs on television. The whole campaign thought is about how this ‘Diwali India ke khushiyon ke beech budget nahin ayega’. Lot of Indian families put off purchases and prioritise the items that they would like to buy during festive season. Keeping in mind these families, which are at the heart of this entire campaign, we put in effort behind getting Amazon’s selection ready, along with affordability levers for consumers this Diwali. The ad displays the concept of a band which depicts an over the top celebration this festive season symbolising a carrier of happiness message to our consumers. Users need not worry about their budget constraints as Amazon is here to provide them with various affordability levers this season.
How is the e-commerce industry shaping up in India and what role is Amazon playing in this?
As far as e-commerce is concerned, in India it’s probably the dawn. With five years of brand journey in India, Amazon as a retail platform has experienced a huge amount of adoption in the market. Many users from tier-II & III cities are getting onto Amazon almost as the first thing that they buy on the Internet. This Diwali millions of new users will also make their first purchase online. Our app is now also available in Hindi, which will aid the journey of many new and existing Hindi-speaking users on our platform.
Indian e-commerce is waiting to be tapped. In the end it’s just about serving the customer through the right offerings.
What are the biggest challenges that the e-commerce sector is facing in India today?
We at Amazon believe, the customer has every right to be discontent with any service that is out there, as services need to keep getting better with time. India’s heterogeneity is one of the major challenges in e-commerce. There are almost around 40 languages in India spoken by 1 million people today. While this is very unique with regard to our culture and tradition, it remains a challenge to penetrate into all vernacular markets equally and be relevant to every Indian. Retail is something most Indians experience widely. Therefore, this remains to be an exciting challenge to be resolved for our consumers.
Infrastructure in India is again something that can evolve to benefit all. Scheduled delivery time should not be delayed once a user places an order. But then again, the condition of roads in India can always be improved to overcome such hurdles. Patchy network and electricity are some of the key concern areas too.
Any future plans of Amazon opening a brick & mortar store in India?
There are plenty of innovations that are being tried out like Amazon Go, like that of a cashier less store, Amazon books stores where based on ratings given by people one can actually check out books, scan smile code in the book store and probably buy the book or get it delivered. While there are few new innovations being tried out, it’s only a matter of time when something right for India will fit in and hence be brought into the market.