Monday, 8 December 2014

Brands Launching Online: A Positive Sign

Our MD Mr. Anurag Gupta's posts on Think Aloud!

We are witnessing an increasing trend of brands launching online first or even exclusively across various categories like apparel, electronic gadgets, books , home appliances etc.  Following are some examples we have seen in recent times
CategoryBrand /ProductDeal & E-commerce Player 
ApparelDorothy Perkins and Stanley KaneIntroduced In India Through Myntra & Jabong
Mobile/ TabletMotorolaExclusively sold through Flipkart
FMCGCoke ZeroExclusive sold through Amazon
Mobile/ TabletXiaomiExclusively sold through Flipkart
Book Half Girlfriend by Chetan Bhagat Introduced online first exclusively sold through Flipkart
Gaming Microsoft's X-Box Gaming ConsolesTo be sold exclusively through Amazon
Home UtilitiesWhirlpool's Kitchen Aid and Philips Lighting RangeTo be sold exclusively through Amazon
The brands are leveraging e-commerce channel due to following reasons:
- Massive reduction in time to market, by taking advantage of existing distribution structure of e-commerce companies across logistics and supply chain
- Test market at lower costs. Given the controlled environment in these cases, the ad spends are also more effective and efficient.
- Reach of an online audience of 300 million. Internet is no longer niche !
- Perceived rub off effects of being a modern brand. 
- National presence through one gateway
Apart from the benefits which the brands are deriving, this trend also reflects the choice of today’s customers. The disposable income of today’s youth  are at an all time high but they pressed hard for time and are looking for immediate gratification. Online  shopping helps them and is becoming a way of life in metros. For the tier 2 and tier 3 town shoppers, online shopping is giving them an opportunity to play on a level playing field with their metro counterparts. Same products are vailable to them at the same time and at the same cost. 
We are also witnessing huge channel conflicts due to predatory pricing being done by the online ecommerce companies. Brands are facing increasing heat from the offline channel protesting against the online discounting. We see some brands taking steps against the ecommerce players like asking them to sell at parity prices, giving users extended warranties of products bought offline etc. 
Current times are witnessing users buying on e-malls at cost of brick and mortal malls, buying choices are made on the go ; genuine products are delivered at doorstep at better pricing . This will mean that more and more brands will be moving online in bigger way. This will continue causing  offline retailers to feel threatened about losing their customers. 
Amidst all this debate there has been an intersting development – Future Group: India’s largest offline retailer & have signed a deal to jointly sell goods over the Internet.  This partnership will explore  several synergies in data sharing, co-branding, cross-promotion and distribution network sharing . Maybe they will set an example for rest of the brands and show how to  adopt different approaches  for both channels. 
We can only conclude that we will see brands will continue looking at e-commerce as an important sales channel in their mix and not a supplementary one anymore.