Why e-commerce brands are wooing the local business owner

Of late, e-commerce players seem to have found an addressable market in India's local business owners. Flipkart is the latest in the long list of brands targetting the SMB segment through mass media communication. A look at the trend.

'Apne Sapne Jee Kar Dekho', says the new campaign by leading e-commerce player Flipkart. The difference this time, however, is that the digital campaign executed by Lowe Lintas and Partners is talking to sellers and business owners, instead of buyers. Recently, Snapdeal and Shopclues also rolled out similar campaigns titled, 'Dil ki Deal' and 'Dhande ko online Lao', respectively. The shift in communication is apparent.

The e-commerce revolution is gaining momentum and is set to enter an exciting phase as traditional brick and mortar companies like Tata, Reliance Industries and Aditya Birla are expected to enter the space by the end of this year, as per a Business Standard Report. In such a scenario, it makes all the more sense for existing players to consolidate their positions.

According to Ankit Nagori, chief business officer - Flipkart, the online marketplace is the most exciting and profitable platform to be on today. "As the Indian e-commerce landscape develops, we expect everyone with a business or who desires to start a business to use this platform as the launch pad," he says.

Nagori infoms that the company aims at increasing its seller base, consisting of manufacturers, wholesalers, retailers and small business owners, from 30,000 to one lakh by the end of this year. He also shares an insight about the increase in the number of sellers from smaller cities like Surat, Jaipur, Mysore, Kanpur, Varanasi, Trichy and Vishakhapatnam, to name a few.

Insisting on the need for a healthy seller base, Vishal Chadha, senior vice president – market development, Snapdeal, says that since sellers and business owners are a vital part of the e-commerce ecosystem, it is obvious to involve them in the brand communication. "Going to television is a natural progression for us as economies of scale begin to matter, especially since we have an ambitious goal of one million sellers. As category leaders, we are investing in growing awareness and in our brand proposition for sellers in the country," states Chadha.

Currently, Snapdeal has a network of over 150,000 sellers including manufacturers, wholesalers, distributors and retailers from across India, and plans to grow this base to 250,000 within this year. In addition to successful offline businesses, its communication also targets first time entrepreneurs who could be artisans, craftsmen, homemakers or students.

According to the Nasscom Startup Report 2014, India is the fastest growing and third largest start-up ecosystem globally. A PWC study informs that, last year, the top 20 private equity deals in the e-commerce sector were pegged at approximately 3.6 billion USD. With such investments being made, it is obvious for these online marketplaces to capitalise on the thriving business ecosystem.

Another e-commerce platform ShopClues which has 1.5 lakh registered sellers at present, targets merchants with a turnover of Rs. 10-15 lakh who deal in unstructured categories of products such as fashion and kitchen, informs Nitin Agarwal, the company's senior director, marketing. Agarwal says that, unlike its competitors who began with select brands and categories, ShopClues has always been a marketplace with a focus on SMEs.

ShopClues' seller base was built primarily on word of mouth publicity, digital marketing and direct selling. On the need for advertising, he says, "Smaller merchants, who are aplenty, are scattered all over the country and there's is no direct way to reach them. Therefore, ATL campaigns become necessary. Our research shows that most merchants watch a lot of news channels throughout the day and in the evening they watch either movies or cricket. We worked out our media strategy accordingly. The outdoor approach also emphasises on key seller markets, for instance, Chandni Chowk and Karol Bagh in Delhi."

'The Google Story'

It could have been inadvertent or based on some foresight, but with its Tanjore painting ad for Chrome, Google was one of the first in the country to reach out to business owners for mutual benefit. Led by a strong demand for digital advertising from SMBs, it came up with Premier SME Partner Programme in 2012. Among the recent offerings from the company are the 'Google My Business' feature and app, and 'Google for Nonprofits'.

According to Sandeep Menon, director, marketing, Google India, SMEs are the lifeline of every economy in the world. Their contribution is particularly important for developing and fast-growing economies like India. "Google India is amongst the fastest growing SME market for Google globally, in terms of SMEs coming online through Google My Business, and also those that are now using internet to advertise their services and products through Google advertising tools like AdWords," he shares.

Google is currently investing in outreach in multiple ways, with their biggest acquisition channel being the digital medium. Other initiatives include the SME road shows, and working with agency and industry partners to host boot camps and workshops to create more awareness about the benefits of getting online for SMEs.

"Small businesses have been the key to Google's success from the beginning, and Google's long term success in India is linked with helping Indian SMBs succeed online. We want to digitise India and connect users with businesses across sectors and markets," adds Menon.

Menon informs that, with over 50 million SMEs in the country, less than five per cent of these businesses have web presence through websites. Their studies have shown that, on an average, web-enabled SMBs boasted 51 per cent higher revenues and 49 per cent more profit, than their offline-only counterparts.

Here to stay...

Ankur Bisen, SVP- retail and consumer products division, Technopak, says that the success of e-commerce depends on the volume of transactions happening on various platforms. "These online retailers actually become 'aggregators' of sellers and buyers, rather than 'retainers', where they buy merchandise from the vendor and sell it to the customer. The traditional retail model does not hold here," opines Bisen. He justifies the shift in communication by saying that India is still an evolving market where people do spend time online, but offline plays an important role in the way they interact with brands.

Bisen is positive about the expected entry of traditional retail giants into the e-commerce sector and thinks it will boost the overall industry. "Players may survive, modify, enter or exit, but then this churn is typical of a fast growing industry. A lot will depend on individual strategies," he notes, adding that although these companies are prominent in the physical space, they will be competing with established e-commerce platforms after a lag of six to seven years, which would balance the equation.

Harshad Hardikar, COO, Indigo Consulting, thinks that merchants and sellers are the two pillars of the e-commerce ecosystem which need to be balanced in terms of ATL spends. Since the industry is witnessing a steady and huge inflow of funds, it should invest in building its merchant base. Advocating the use of the digital medium, he says, "Platforms like YouTube and Facebook offer sharper targetting parameters without compromising the reach and, hence, are cost effective."

According to Vineet Bajpai, Group CEO – TBWAIndia, the trend is an inevitable outcome of the growing e-commerce and m-commerce industry. Describing the move as appropriately timed, he says, "These ads are a manifestation of the business reality. Additionally, they will educate the consumer base about what goes behind the online store-front and boost the credibility of these brands. So, it's a win-win scenario for all."

Like Hardikar, Bajpai is also an advocate of the digital medium, which he thinks beats all others in terms of "targeting" and "measurability."