Growth of e-commerce and digital marketing in India

Some trends are hard to miss. By profession, I am a digital marketer and as far as India (and even the west for that matter) is concerned, the e-commerce and digital marketing industry have hardly seen better times. Needless to say that both, e-commerce industry and the digital marketing spends are growing.

You may ask why I am combining the two and what the relationship is. It’s intuitively simple. We all know that wherever there are buyers and sellers, there is trade and wherever there is trade, there is marketing. If the trade is online, so is marketing. The trade is called “e-commerce” and marketing is called “digital marketing”. Growth of e-commerce industry offers a direct economic incentive for companies to spend on digital marketing and efficient and engaging digital incentives compound the growth of online commerce. Each has their own sphere of existence and both are independently on the rise but there is also a significant overlap and this overlap is really what I am interested in.

A point to note here is that although not all companies sell products that can be sold online, they need to have strong digital presence even to come into the consideration set of the customer, who may or may or may not buy online. For instance, a laptop or a notebook PC may be fairly expensive for an Indian consumer to buy online, but rarely any consumer would buy it without checking online its performance reviews, specifications, service quality of the company etc. Reviews and recommendations play an important role in helping the consumer make a purchase decision. Merely this fact offers diverse opportunities and presents unprecedented challenges for a digital marketer or any marketer for that matter.

Without further delay, let me outline two important aspects in this context. Let us take a look at the drivers of growth of e-commerce industry in India and trends are important from a digital marketing perspective. I could list at least 20 in each, but let us focus on the important few.

Drivers of growth for e-commerce industry in India

Growing internet penetration – This is a no brainer. There is hardly any doubt that internet penetrate in India is growing a rapid rate but it is still at a fairly low level. Nevertheless, several big banner companies have invested in creating the internet infrastructure and there is promising market for ISPs. How much of this is 3G penetration or broadband penetration is a matter of research but as far as online payments of re-commerce transactions are concerned, the requirement of very high internet data speeds is subdued since transactions can be made even at low speeds (although not very low), so that is not an obstacle.

It would be interesting to see what exactly is driving the growth of internet penetration itself. Are the benefits of the internet spreading by word of mouth? Or is the internet is being perceived as a necessity? Are rural and semi-urban kids pestering their parents to take an internet connection because every one of their friends has it? Is government playing a part is spreading awareness? Perhaps the right answer is all of the above and several more factors. Of course, providers are reaching the nooks and corners of the country and rates have fallen substantially. New tariff plans are being introduced and aggressive marketing is driving penetration faster.

Secure payment gateways – One of the biggest factors in enabling e-commerce is implementation of secure payment gateways. Online payment security, protection from online fraud of theft of data, security checks built in the payment process etc. are helping people feel safe about e-commerce. These systems are improving. Online payments evolved from merely having to remember a single password to validating the password on multiple platforms including mobile phones, mails and other smart devices, to even having to do all together to get validation. Not only are the payment systems becoming more and more secure but the ways to generate passwords and validate them are going complex and impenetrable. These systems have also taken advantage of growing mobile penetration in India.

Increased brand trust – People have started trusting brands for their online transactions. The online travel industry is a great example of this. There were no online travel agents in India before 2000, until MakeMyTrip showed that flights tickets can be booked online safely, easily and conveniently. Then there were Yatra, Cleartrip, etc. A new industry was born and it prospered. Similarly, doing online banking transactions, trading shares, making money transfers etc. are becoming routine activities and there is an overall acceptance of internet as a medium of commerce. The credit for this goes to the trust building activities taken up by early brands that moved online and their credibility proved contagious. Also, the trust these brand gather offline is transferred online. More the trust, better the participation from consumers online and it is growing.

Ease of use, convenience and informed decision making – Perhaps this should have been the first point. Internet offers an efficient platform for collecting information, reading and writing reviews, offering peer to peer opinions, comparing prices and features, and making informed decisions. For standard commoditized products, that do not need a touch and feel interaction, internet is the best way to buy, Order online get it at your doorsteps, and that includes flowers, pizzas, cabs, and not to mention a long tail of items that you otherwise wouldn’t know where to buy. It’s easy. Think of bill payments. I can’t remember the last time I paid any of my cable TV or internet or telephone or mobile bill standing in a queue. By the way, I also can’t remember the last time I purchased a movie ticket standing at the counter (or in black). I stay in Bangalore and most of these things are possible. But with such enticing benefits, these are sure to spread to interiors of India.

Best prices – Yes, in my experience, you get the best prices online. Because of its measurability and reach, the online medium makes it very easy to launch promotions that offer discounted prices. Let the price-elasticity-of-demand metrics for the strategy guys. Most of the times, best reason to buy online may be the best price.

Trends that digital marketers cannot escape

Having made a strong and intuitive case for growth of e-commerce in India, let us take brief look at some trends that are a direct result of how people behave online. I will write another post explaining each one of them (and trust me, all of these deserve books to be written on each), as for now, let me list them here.

Abundance – I have already outlined the drivers of growth of e-commerce. This might be a very obvious trend (and hence totally miss-able) but there is “abundance of choice” on the web. This abundance of choice is in its true sense. There are unique products and services, cheaper prices, wider choices, offers, promotions, convenience, ease, payment options, credit and what have you! Shopping is smarter and smart are shopping. So if you have a mundane offering and no innovative marketing, you are pretty much out of the race.

Comparison shopping ­– Again a no brainer! With all the information that the web carries, it would be rather irrational to not compare and buy. Everyone wants to be convinced that they have made the smartest buying decision. There is pride in doing so. The explains why there are so many sites that let you compare all sorts of products from cars to insurance policies to digital cameras to notebooks.

Social commerce – This is new and intriguing trend. This empowers the consumers to buy at a wholesale rate and leverages the power of bulk buying to it potentials. It is good for both sides the trades. The seller gets business and easy access to a bulk of customers without spending much on marketing and the consumers get wholesale prices. Sites such as SnapDeals, Dealsandyou etc. are rapidly growing in popularity. Of course, the biggest is Groupon.

Reviews, recommendations and evangelism – I guess this needs the least explanation. All the Facebooks and Twitters of the world are used by billions to recommend products to their networks. Then there are a host of sites specially made for this purpose. For instance, Yelp.com for restaurants, TripAdvisor for hotels and holiday destinations and Mouthshut.com for consumer product complains, offer valuable and consumer generated content.  Needless to mention, blogs play an important role here.

Customer engagement – When it comes to digital marketing, merely splashing the web with display advertising and expecting sales to grow is childish at best. Digital advertising is no longer only about brand awareness; it is about engagement with the brand. Brand awareness is easy to achieve and only needs money. Engagement is far more challenging and beside money (perhaps lesser), it needs innovative thinking, great products, process and operational improvements, marketing strategy changes etc. (My fellow digital marketers, stop measuring return on investment, that is for the finance guys, you should measure return on involvement or return on engagement.)

Rich media consumption – Where’s cricket biggest stadium? Thinks twice! It’s not the Melbourne Cricket Ground. It is YouTube. For instance, IPL was live online on www.youtube.com/ipl. Video consumption is growing and these days you can’t afford to not have a YouTube presence. Online video consumption is growing an exponential rate and YouTube is world’s biggest video platform. Besides video, people also want to consume podcasts, audio recordings, presentations, pictures, blogs and tweets etc. No wonder then, that marketers are also using these formats to engage consumers in b2b or b2c.

Let me end this rather long blog post by saying that as more and more people stay online, they are more likely to learn about products and service online and buy them online. Hence commerce and marketing, both online, will go hand in hand.

Advertisements

One thought on “Growth of e-commerce and digital marketing in India

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s