As traffic & sales pick up, Snapdeal, Amazon, Flipkart and others ramp up ad spends
According to RedSeer Consulting, the sales by players in this category were higher in December versus November by nearly 20 per cent
The e-commerce category which experienced a lull in terms of their sales and marketing post demonetisation, seem to be back in action. Players in the category are once again back to advertising aggressively to promote the numerous ‘year-end’ or ‘beginning-of-the-year’ sales offers running on their respective online platforms. This time around, activities from the e-wallet players who were aggressively advertising postthe note-ban have slowed down a bit and we see the e-commerce majors taking front page ads or frequent spots on television once again.
According to a research done by RedSeer Consulting, the reduced impact of demonetisation, made the customers more comfortable with online shopping. In fact, last year during the sale week (December 18-24), there was strong growth in traffic and sales of more than 15 per cent were registered versus previous weeks. The overall traffic on different channels was around 10 per cent higher in December as compared to November. Further, the sales were also higher in December by nearly 20 per cent. According to Mrigank Gutgutia, Engagement Manager from Red Seer Consulting, the industry is dusting off its demonetisation related challenges, as customers are coming back gradually to shop again, even though it will take more time to recover 100 per cent from the shock.
Online furniture portal Pepperfry is celebrating its 5th anniversary sale through campaigns that consist of two creative films, currently playing on TV. Fabfurnish is also running their year-end-clearance sale with a 70 per cent off. Online fashion portal Myntra has celebrities like Hrithik Roshan, Deepika Padukone and others promoting their fifth edition of the ‘End of Reason Sale’from January 3 to 5. Other than the year-end sale offers, which Flipkart was promoting towards the end of 2016, this time it is using kids to talk about ‘Flipkart Fashion- What’s in trend and what’s not’ through two ad campaigns. Amazon Fashion is running their‘End of Season sale’, where the site is offering 40-80 per cent off and is promoting it on TV. Snapdeal is currently running ‘Welcome 2017 sale’ from January 8 to 9.
Advertising spends & mediums used:
The year has started with a bang in terms of e-commerce brands spending on advertising, in comparison with last year, when only during the festive season there was an increased marketing activity from them. 2016 was a slow year for the category in general because majority of the players had to deal with heavy losses and valuation struggle, as a result, there were no astronomical spends.
Commenting on the reason behind heavier spending on advertising by e-commerce firms recently, Saurabh Uboweja, Brand Guru and CEO, Brands of Desire said, “E-commerce big wigs face a unique set of challenges. All of them have seen their sales nosedive post Diwali. In the short term, they need to overcome the liquidity issues their customers faced due to demonetisation and the fact that COD, one of the most preferred payment methods till demonetisation has discouraged customers from spending. The COD pull back, however, is actually a blessing in disguise as it adds to the cost of servicing customers. E-wallets and card payments at the doorstep are likely to replace the traditional COD as liquidity improves. This should help them reduce operational losses to some extent.”
He further added, “The other major issue facing large e-commerce marketplaces is profitable sales, especially on a per unit basis, something that becomes a key driver behind high pitch sales campaigns. On one hand they need to improve their overall performance month-on-month while on the other hand, they need to overcome dull seasons such as post Diwali, post demonetisation and post-Christmas so that they don’t put additional stress on their fixed costs. The pressure to show growth in terms of sales, adding new customers, increasing app downloads and ramping up customer engagement is pushing e-commerce marketplaces to spend more on promotions and advertising which for many big players already tops 40 per cent+ of their net revenue.”
These players are currently using a lot of television and print to promote the sale offers or their respective brand campaigns. Pepperfry birthday campaign is being aired across a bouquet of entertainment, movies, English infotainment, and lifestyle channels and select Hindi GEC HD channels/properties and regional channels. The total outlay for the campaign is Rs. 5 crore, In addition to TV; the sale message is also being promoted across digital and social platforms like Google, YouTube, and Facebook.
Myntra recorded a 160 per cent growth in revenues during their fifth edition of the ‘End of Reason Sale’ with 2.1 million app installs. The brand also used TV and print to promote their campaigns, featuring well-known Bollywood celebrities and cricketers. Both Amazon and Snapdeal are also using a lot of TV as well as print to talk about their respective sale offers.
Uboweja cited, “The heartening fact is that initial reports from these massive sales campaigns demonstrate that Indian consumers are somewhat unfazed by the effects of demonetisation and post a short hiatus are back to spending on deals, which is the cornerstone of Indian e-commerce sector. All e-commerce companies realise that they need to be in the top 2 in their sector or overall and they need to be profitable in the mid to long-term if they have to sustain and survive the battles and win the war. A multitude of these factors will continue to trigger large scale spending on TV and other mainstream media by these players.”
Watch ads by e-commerce players here:
Myntra: End of Reason Sale:
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