Capturing the Digital Footprint --- How Amazon, Flipkart and Snapdeal are converting Visitors to Customers
There are currently more than 200 substantially large E-retailers in India, although the dominant market share is controlled by Flipkart, Amazon and Snapdeal. Then there are companies like Yebhi, Homeshop18, Naaptol, Paytm, Infibeam, Letsbuy and others who are giving the market leaders a close chase. The most shopped products online happen to be Computers and Laptops, Mobile Phones and Cameras, Shoes and Garments, Lifestyle products and Books. There are also niche sites like Lenskart selling spectacles, Big Basket selling vegetables, 1mg.com selling medicines and FirstCry selling product for the newly born. And then we have internet based service providers like Yatra and MakeMyTrip in travel segment, OYO and Zo in hotel segment, Zomato and Foodpanda in food segment, Ola and Uber in Taxi segment, Naukri and Monster in Job segment and BookMyShow in the movie ticket segment. With venture capitalists pumping in billions of dollars, the online marketing business is looking exciting like never before.
However, the online marketing business had its genesis in the beginning of this century with companies like Bababaazar.com trying to sell vegetables online, Naukri.com trying to create a directory of job listings and MakeMyTrip trying to sell air tickets online. However, the dotcom bubble burst of 2001 saw a lot of internet based companies folding up as the taps of funding dried up. While Bababazaar.com closed down, Naukri.com and MakeMyTrip.com narrowly survived. The internet penetration in India was extremely low, computers and laptops were very expensive, internet was very slow and the net access charges were prohibitive. Not many buyers felt encouraged to go to a cyber café to order products online. The hacking and security threats also kept the consumers away from buying online.
Now cut to 2015. There are now 402 million internet users in India, the second largest in the World after China. About 60% of the users access the internet through smartphones, the cost of which has come drastically down thanks to companies like Xiaomi, Micromax and Lava. The speed of internet has rapidly increased with introduction of 3G and 4G. And the net access charges has also come plunging down with companies like MTS offering 20GB at ₹999/- and companies like Aircel offering Pocket Internet of 20MB at as low as ₹8/-. So now we have a deluge of internet shoppers coming not only from Tier 1 and Tier 2 cities, but also from remote villages. No wonder, the E-commerce companies have tied up with India Post to deliver parcels in remote areas. India Post has transacted business worth ₹500 Crore in the cash-on-delivery (COD) mode in the year 2014-15.
Now if we analyze the growth of Flipkart, Amazon and Snapdeal in India, there are a lot of key learning to take home. Between themselves, these big boys control 80% of the Ecommerce market in India. Amazon has seen its business grow fourfold this year. Flipkart, during the 5 day long ‘Big Billion Sales’ promotion campaign, sold products worth more than $300 million. Snapdeal has sold 5 million products in three days during the Diwali festivals. The combined gross merchandise value (GMV) of the Indian e-commerce companies' in 2015 is slated to be over $12 billion (₹78,000 Crore), compared with $4.5 billion (₹29,000 Crore) last year.
Just how have these companies managed to capture the digital footprints, convince the buyers to make purchases and also converted them into loyal and frequent purchasers? Well, there are a lot of innovative strategies at play out here. Of course, these companies do flash out full page ads in daily newspapers, advertise heavily on television and use high profile brand ambassadors like Amir Khan or sponsor events to get the customer attention. But, in the next stage, they go for a pure play internet marketing strategy that ensures that the conversion rates are high as well as the customer satisfaction is also ascertained and improved.
For internet based marketing, companies use the SEO (search engine optimization) and SEM (Search Engine marketing) to grab the eyeballs. In the SEO strategy, the companies endeavor to insert long-tail and short tail keywords in their website and meta-tag that is easily identifiable by the spiders or crawlers of the search engines. This helps them to get a better ranking in the SERP (Search Engine Ranking Page) and get a display in the first or second page in Google Search. As 85% of net visitors do not go beyond the first page of Google Search, it is extremely important to have an SEO strategy that gives you a better ranking in SERP.
In case the competition is stiff and the SEO strategy is not delivering the desired results, onecan go for Search Engine Marketing (SEM). This is done by effectively using social media sites like Facebook, LinkedIn, YouTube and Twitter. One can put up text ads, banner ads and videos in these sites and pay them on the basis of PPC (Pay Per Click) or PPM (Pay Per Mille). In the case of PPC, an advertiser is only charged if the targeted customers click on the ads. In the case of PPM, the charges are based on a thousand impressions (displays). For Mobile Ads, one can use a pop-up ad that is inserted in an App to grab the attention of the mobile phone user.
The e-commerce companies use another innovative strategy called ‘Affiliate Marketing’ to drive traffic towards their sites. Amazon was a pioneer of affiliate marketing and now most E-commerce companies use the same. Affiliate marketing is an incentive-based marketing strategy in which the E-Commerce company pays a certain amount to the affiliate who brings in visitors or customers to their site through their own marketing efforts. The affiliates can create their own website and blogs to bring in visitors, whom they can later re-direct to the e-commerce companies website to earn money.
Apart from banner ads and affiliate marketing, companies like Ola Cabs and Uber are also effectively using SMS (Short Messaging Service) and Referrals to drive traffic to their sites. Ola and Uber give the customers a heavily discounted (sometimes free) first ride and then a further discount if they refer their friends and acquaintances and that person also takes a first ride in their cabs. This has ensured a steady stream of traffic as well as growth in loyal customers for both Ola and Uber.
Once the visitors have come in, the first touch-point between the e-seller and the digital customer is the landing page. There are usually two kinds of landing pages --- the clickthrough landing page or the stand-alone lead generation landing page. Whatever form it takes, the main purpose of the landing page is to engage the customer for making transaction and collect data about the visitor who has arrived to the website and store the data in the back-end databases.
On, the first visit, the customer might choose to buy or not buy any product from the ecommerce vendor. This is where the stored data comes into play to either make recommendations to the customer or go for a re-marketing campaign. The E-commerce sites have an inbuilt recommendation engine that uses complex algorithms to predict what the customer is likely to buy on the second and subsequent visits and customizes the landing page accordingly. Thus, a customer who has inquired or bought a mobile phone will be seeing a choice of covers, earphones, data-cards, screen-guards and power-banks displayed on the screen during the next visit to the same site.
In case, the customer wishes not to come back to the site after the first visit, the company will start following the customer in every site that he or she visits. This is known as the Remarketing campaign. I recently inquired about a toy train in Babyoye.com, but then chose not to buy it. And thereafter whenever I opened any site, there was a toy train running around reminding me of my inquiry in Babyoye. The company identified me by the IP (internet protocol) address, cookies or through E-mail login id. This can actually be irritating at times, but it also acts as a reminder to the customer who has deferred his/her purchase.
The next challenge for the E-commerce players is to smoothen the navigation and transaction process in their website. This is done very effectively by Amazon, Flipkart and Snapdeal by ranking the categories, products and sellers and displaying the most popular ones. They also offer the option of customizing the options to make the right combinations before putting the products in the e-cart. The payment option has also been made easier by giving an option to store the details of the credit/debit card. And most of the E-commerce companies have moved on to Mobile Apps where the ease of transaction is much faster and easier.
As a follow-up strategy to the existing and potential customers, the E-commerce players engage them through E-mail and SMS based marketing. The customers are regularly updated about new product launch, flash sales, special offers and up-gradations happening through the sites. While most of the targeted customers might choose to ignore the messages, a small fraction of conversion can also lead to big number of sales.
Digital Marketing is exciting because it’s a marriage between technology and marketing strategy that leads to a lot of innovation on everyday basis. It’s a game where the smartest, fittest and the agile player who properly understands the customer need, wants and demand can actually survive. Many small players like Lenskart, BookMyShow, Redbus, Faasos, 1mg.com and Firstcry are giving the big players a run for their money and also creating niche categories. The statement that all you need to start a digital marketing company is a laptop and internet connection is not very far from the truth. The digital marketing business is growing phenomenally and is poised to touch the $15 billion mark in India and $2 trillion mark globally. And that’s perhaps the secret why Flipkart, despite making a whopping ₹2,000 Crore loss, is still the darling of the digital consumers as well as the investors and venture capitalists who want to pump in more money in these ventures and see them flourish.
(The author is a Professor of Business Analytics and Digital Marketing. The views expressed here are his own and not that of any organization).