Perspective | E-commerce - the new 'go-to' for every category

While the world is going gaga about how e-commerce is taking over conventional ways of shopping, what caught our attention were the categories which take the online route to not only market and advertise the products but distribute and sell it here as well.

From BSFI to consumer durables and other electronics and assistance to plan your travel to fashion - e-commerce has been attracting brands from all these categories and more. But we now also see products from categories that were essentially sold offline – beauty products, home care essentials and food and beverages are also taking the route to E-sale opportunities.

While it may be a value addition for e-tailers and comfort of shopping for consumers, what we seek to understand is the ROI and ROV a brand receives by online sales.

In this edition of Adgully Perspective, we ask industry experts across sections as to how they perceive and understand this changing scenario. Our panellist include Sanjay Tripathy, Sr. EVP, Marketing, Product, Digital, and Ecommerce, HDFC Life; Tarun Malik - Director of Media Solutions Center-South West Asia, Samsung Electronics; Mukesh Bansal, CEO, Myntra and Head of Fashion, Flipkart and Arun Chandra Mohan, Founder and CEO, Jabong.com and Harshil Karia, Co-founder, Digital Strategist, FoxyMoron.

Tripathy is of the opinion that Ecommerce is now a critical piece in the medium and long term distribution strategy of most insurance players. Insurers are exploring cost-effective modes of distribution and disintermediation and online platform is a perfect way to reach out to customers efficiently. “Though the contribution of online channel as of now to the total sales pie is low, this mode of distribution is expected to gain solid momentum in the coming years. We are the first company in the category to set up a dedicated team for Digital Marketing & Ecommerce 3 years back. This team is also leading all digital customer experience initiatives within the organization and the only organization in BFSI to set up a dedicated delivery chain for Ecommerce. Additionally, we have ensured that we get specialists on board and put a large team in place comprising social media, ecommerce and digital/mobile marketing specialists,” he added.

In fact, the ‘Indian Life Insurance’ report of 2013 by BCG and FICCI reveals that for most life insurers, direct sales through online channels result in higher ticket sizes of policies, with greater persistency and lower sales costs compared to other channels. The strong business case that this new channel presents is not only a result of purely external forces such as increased Internet access, demographic splits of online audiences and mobile penetration, to name a few, but also a result of conscious efforts and continuous investments by insurance companies in building up the online category.

Bansal believes that the 24x7 nature of the online shopping is changing the way consumers used to shop earlier. “Currently, online retailing is about 0.5% of all retail in India. For many brands 20 to 30% of their businesses are coming from online, which is likely to increase up to 50% in the next two to three years.

Speaking about the advantages and ROI, Tripathy said, “Renewal rates and persistency are high. Underwriting is quicker. And it’s cheaper for customers. While the offline insurance premiums have a renewal rate of about 70%, HDFC Life has seen over 95% renewals for online insurance. For HDFC Life, online channel is making insurance premium underwriting quicker, less prone to error and higher renewals. For customers, online insurance comes 20-25% cheaper as there is no broker involved in the transaction. We are offering tablets to about a third of our Salesforce so that insurance premium can be underwritten on the same day and all data is validated online. The tablets are given to the top performing agents as an incentive. HDFC Life’s online revenue has grown 20 times to Rs 300 crore since 2012, when we started online sales. HDFC Life is expected to double its revenue from its online insurance sales by 2016. We are seeing 10% of its new insurance business coming from the online sales in just about two years”.

Karia said, "Fundamentally the ROI that a brand receives through online sales is not overtly different from an offline sale. It is however, important to note that with brands having extremely large footprints on digital via site traffic and social communities today, e - commerce now provides them with the luxury of a purchase which is a click at their fingertips. The value is further extended as brands are today striking deals with E - commerce players where in return for traffic to their platform, brands receive banner space as a barter. That’s a win win for both brand and e - commerce player."

Mohan said, “We deal with national and international brands and have realised the fact that Indian consumers are becoming more aspirational in terms of fashion’s understanding and it's growing today. And as consumers are moving up I feel it's a good sign for e-commerce industry and for us as what excites us are the consumers.”

Malik believes that e-commerce is something that plays an important role for every industry and is one of the most preferred medium for consumers today. “There are better avenues available, hence we've just announced Club Samsung, entertainment app, and we are looking at joining hands with chain of lounges in the country. We are evaluating and speaking to relevant lounges which fit the brand and I think we will announce it in some week’s time. There are always opportunities' but being the premium brand we like to evaluate and cautious about where we are going.”

“I think online buying pattern is growing not only in metros but in smaller town too. Smaller players who are not part of e-commerce world are also looking up to and we are in the discussions with few. I think buyers who are offline, they are missing big opportunity. Future of retail market in this country is online,” Mohan adds. 

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in their 2014 report stated that the corporates are planning to spend about 25-30% on advertising in this festive season as compared to the last year in consumer durables, electronics and auto taking the lead, but this change is expected in the e-commerce space ranging from higher sales in mobile telephones, shoes, apparel, gifts and electronic gadgets.

Tripathy believes that digital is soon going to be the single biggest contributor to the insurance business funnel. HDFC Life was able to match & better the distribution reach of LIC through the launch of its online channel. Ultimately, the Organisation which is able to offer the best experience to the customer is likely to survive & win in the long term. That is likely only through online. Because the new generation of consumers, born in the post-liberalisation era is coming of age now & is most comfortable with technology. In fact their first point of contact or experience with organisations is likely to be only through Online.

As per the on-going discussions and spends by marketers it appears that TV would remain as the preferred medium for a lot of categories like FMCG, consumer durables and car and bike ads, but the increasing penetration of the social media will also attract the marketing and media planners. The social media is far more focussed when it comes to target audience. Besides, the age profile of those using social media is a big temptation for the media spenders, points out the paper. (Source ASSOCHAM report) | By: Aanchal Kohli | Twitter: @aanchalkohli 

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