The first view is based around market penetration. Considering the ecommerce penetration in India is still quite less, even among online buyers, there is an overall lack of loyalty towards marketplaces and more towards discount.Hence, there is always enough scope for every new portal to be successful. More so, if the new platform caters to a very specific niche audience, or is a brand owned website.
The other popular view is that eCommerce portals at substantial scale are so big and capture such a huge chunk of market share, that it’s almost impossible to break the wall. More importantly, even if someone ends up spending sufficiently, a customer would ideally not opt to move from the more famous giant offering extremely competitive pricing to a new kid in the block offering similar pricing and with a less evolved platform most of the time.
Large eCommerce companies (a handful in India) actually do much more than occupy larger market share and dominate sales. Starting from influencing pricing of products in every listed category to promoting new brands and helping them gain considerable traction, there is a huge dependency for brands and sellers on the modus operandi of these eCommerce companies, if they want to succeed online.
A big influence of these marketplaces is also experienced by other smaller marketplaces or online retailers who are in direct category competition, on multiple aspects, ranging from early adoption of product segments, incremental sale because of exclusive deal on same products with lesser marketing spends, more brands to play within the same category, etc. But the bigger effect can be seen when there is a sale going on in one of the premier portals. It can be a quarterly sale, End of Season Sale, clearance sale or a brand sale.
Last year, arguably the second largest online fashion retailer in the country got a shock when they ended up with 5 times more sales in one day as compared to the usual days, without any marketing. It did not take them much time to realize that this huge uptick was because of the End of Season Sale run by the largest fashion eCommerce retailer in the country. A smaller boost was again seen a month later when one of the cross category eCommerce giant launched their Fashion Sale. When I approached a few eCommerce marketing leaders, everyone seemed to have seen a similar effect, but no one could completely attribute this to a specific or logical reason.
To explore this in depth, I started working with smaller online fashion retailers – both brands and marketplaces. Barring one brand, everyone else saw the same effect. One ethnic fashion brand for women, which achieved a business of 1 million rupees on the first day of their own End of Season Sale, ended up making 3 million on the first day of End of Season Sale of the largest fashion e-retailer.
I picked up 7 case studies including a brand that failed to capitalize. The first thing that we checked was the funnel of users, the websites they came from, when they visited out target websites, and where they went next. Also, we created tagged landing pages to get approximations on search terms from where visitors came to the websites. Product page visitors and product specific searches went up and so did spend on campaigns with Discount or Sale along with brand terms.
After a lot of data crunching, we realized a few things. The amount of visibility or traffic that was generated during this End of Season Sale, created a spike in the overall interest of visitors to make use of the Sale. Also, a percentage of visitors also searched for the same product to see if they can get it at a further discounted price elsewhere. Lastly, a chunk of visitors who saw the same discounted price on marketplace as well as brand eCommerce site, preferred to buy from the brand site directly. The brand site that saw a dip in sale, had all products at 0 to 30% off, while the same products were available in marketplaces at over 50% discount. In fact, a lifestyle sports brand, which isn’t present on marketplaces, saw an increase of sale during those 3 days, primarily because they were priced better than their competitors.
This gave us very important insights on how to capitalize on larger portals and increase sales. There is always an incremental baseline sale value that you should achieve on a regular basis, and then there are sale spikes which can come either when you are running some promotion or when a large eCommerce portal in the same category are running their promotions or sale. For that to happen, you need to ensure that your brand visibility and search volumes go up constantly and you offer a comparative or better pricing when you need to trump competitors the most. Also, unless there is an outright buy strategy involved, you need to modulate pricing in marketplaces when compared to own brand site, since the split of impression share through marketplace’s cross-sell and upsell can be negated only in your own portal.
This article has been authored by Soumajit Bhowmik, Director of Ecommerce at Capillary Technologies