Flipkart v/s Snapdeal: Amazon is the Winner

The verbal spat between Flipkart and Snapdeal has given Amazon enough time to think and strategize to go ahead of its desi counterparts. The Indian players are making big strategies to outperform each other but both are losing market share. Amazon who launched its Indian marketplace in June 2013 is inching ahead. As per a report by Morgan Stanley (March, 2015) the market leader Flipkart has 44% market share of Indian e-retail whereas market follower Snapdeal has 32%, Amazon is having 15% and rest 9% is divided among other players.

In May 2015, the unique visitor count for Amazon was marginally more than Flipkart and way ahead of Snapdeal. The figure below depicts the detail count of Unique Visitor in May 2015. It shows the popularity of Amazon is increasing. With Indianised ad campaigns and catchy taglines like ‘Hindusthani Dil Chahata Hai - Aur Dikhao Aur Dikhao’ , Amazon is changing its image. It is also using the Indian Post very extensively to reach out to the remote and rural areas.    

The war is becoming bigger and interesting. New players like are adding extra fuel to it. Stiff competition among the e-retail players will prove benefit to the Indian Consumers. So let’s be calm and watch it. 

Re-Branding in Indian e-Commerce Space

As per a study by ASSOCHAM-Deloitte, by end of 2015 the Indian e-commerce industry is set to cross $16 billion. This sector has grown steadily from $.4.4 billion in 2010 to $13.6 billion in 2014. This sun-rise industry is flooded with many startups, whereas some established players are diversifying their business offerings as well as adding new business lines and some has gone for REBRANDING. The recent example is Quikr, the online classified business firm with a new logo and new tag line ‘Aasan hai badalna’. Prior to Quikr the largest Indian e-retailer Flipkart has also undergone for rebranding, similarly with a new logo, new tag line ‘Ab Har Wish Hogi Poori’ and 2 minutes 30 seconds long TV commercial. The real estate search portal, Housing.com also has undergone for rebranding during Holi 2015 with a new logo for LOOKING UP. Having discussed these examples, one question comes to mind- Has the value proposition been changed? Let’s understand that.

What is a Brand?: As per bookish definition brand can be defined as “A distinguishing symbol, mark, logo, name word, sentence or combination of these items that companies use to distinguish their product or service from others in market.” This definition is more from the organization or company stand point, but from a customer prospective, brand is something that is provides confidence, passion, belonging, action and security to the customer. There is a very thin, still very distinguish line between the product (or service) and brand. A product (or service) can be defined as a bundle of benefits but brand as a set of unique values. So brand is always made by the customer, for the customer & of the customer.

Quikr Rebranding: Changing the funky logo to a more formal one Quikr, has gone for a fresh look. New business lines like QuikrHome, QuikrCars, QuikrServices & QuikrJobs have been added to the traditional classified business. During inception in 2008, the company aimed to be a simple, reliable C2C (Customer to Customer) market space and they have very much achieved that. Quikr NXT, the instant chat (between buyer & seller) and free home delivery service is bold yet valuable step taken by Quikr.

Flipkart Rebranding: (#AbHarWishHogiPuri) The story is bit different for Flipkart. In 2011-12, this home grown e-retailer used to be a undisputed player in the market but now, the intense competition from global player like Amazon and also from other desi e-retailers like Snap Deal and PayTm making its difficult for Flipkart. Various strategies have been tried and tested for Flipkart- new category addition, digital music, cash on delivery, from a e-retailer to e-market place etc. The current strategy is rebranding. It has came up with a new refreshing look- the logo of a shopping bag with "F" on it and also the new catchy tag line- "Ab Har Wish Hogi Puri". It's very difficult to say anything about the tag line (Har Wish...), but as per industry experts, this logo is mobile friendly and Flipkart is trying to go mobile-only. So the question remain same- has the value proposition been changed for Flipkart or this rebranding is an answer to Amazon's Aur Dikhao (#AurDikhao) and Snap Deal's Dil Ki Deal (#DilKiDeal) campaign?

Rebranding is not just to change the logo or tag line or changing the TV campaign. There must be some visible changes in the offerings. So let's see which e-commerce company in India will go for the change in offerings at the first place, rather than going for changing the logo or tag line. 

Myntra is App-Only: Is it Too Early to Predict the Consumer Behaviour?

India’s largest fashion e-retailer, Myntra closed its website on 15^th of May and moved to App-Only platform. Soon after on 20^th May 2015, Economics Times reported a 10% dip in sales for Myntra. Is it a good strategic move by Myntra or is it a pilot project by Flipkart to test the potential of App-Only platform in India? Some argues that there is huge growth potential of m-commerce in Indian market so it is good to forgo profit for growth. And some counter argues that it is wild move by Myntra as the Indian market is still so nascent for App-Only platform. Don’t worry this debate will go on. But in the article we will discuss about the market readiness from the consumer stand point not from the technology stand point. We will look into the consumer behaviour of shopping goods like fashion product. So let’s start.

Before analysing the consumer goods classification, we will look into the Five-Stage Model of the Consumer Buying Process. It is very simple and very much self-explanatory. The figure-1 given below shows it:

Now let’s have a glimpse of the consumer-goods classification:

1)      Convenience Goods: These product are purchased frequently without having much of involvement and shopping effect. Products like grocery items, magazines, newspapers, chips, chocolates, soft drinks, ice cream and staple food items etc. come in this category. These are mainly non-durable and the brand switching is very high because consumer seeks convenience and availability of product. And the consumer doesn't plan to purchase these kind products, takes instant decision to purchase these products so spends very little time in each of the step in the buying process.

2)      Shopping Goods: If we think about products like furniture’s, apparels (fashion goods) etc. these come under shopping goods. Where the consumer spends comparatively more time in each step of buying process than the convenience products. He tends to compare the products based on their variety, suitability, quality and price etc. Moreover he takes much more involved and planed decision, and engages in high to extensive information search prior to the purchase. Brand switching is not very high in these types of purchase.

3)      Specialty Goods: In the third category, the consumer incur special purchasing effort as the money involved in this type of purchase decision is very high. So he spends a lot of time in information search, excavation of alternative and also during purchase decision. Luxury products, automobile, antiques, purchasing house etc. come in this type of products.

So Myntra is dealing with fashion products and they belong to the shopping goods. I just want to highlight one point here in shopping goods- “Consumers compare the products based on their variety, suitability, quality and price etc.” And when something is accessed by the application, the consumer has no chance to compare and contrast in that app. Because only one window is accessible through the mobile app unlike web browser. In case of web browser, the consumer can shuffle through the web pages and compare the same product.

Let’s look into a simple example. Suppose you want to buy one sports shoe online, costing you between INR 3000 to INR 5000 and you only like three brands Puma, Adidas and Nike. You open your laptop or PC or tablet whatever to access the internet and filtered you choice as per your requirement in Flipkart, Amazon, Snapdeal, Yepme and Yebhi. Now you have a chance to compare your options very extensively as you can move through the tabs in your web browser. You might have a chance of finding a same product in all these 5 websites with a different price range. So as per your choice you will select the product from any of the ecommerce site. But in app only you don’t have any chance of doing such kind of juggling so options are less.

I think is a simple yet powerful proposition that might hurt Myntra. We Indians are no doubt price sensitive and like Amazon ad “Aur Dikhao” (show more) is our birth right. No matter how friendly the interface is, how selective the customize offerings are and how powerful the CRM tool is, we don’t give a damn. We are not brand loyal to any of the ecommerce player also.

Hope the strategist in Myntra are trying to create a new kind of consumer behaviour from this move. I wish them all the best & “All Will Well.”                        

Yu Yureka: A Killer Strategy by Micromax & Amazon

Indian smartphone market is very lucrative for many companies. Every week new budget smartphones loaded with great software and hardware features are hitting the market. With high disposable income, tech savvy young Indians are the new era Innovators (the customer segment- tries, explores new product in the market) for the technology companies. After the success of Chinese brands like Xiaomi, 1 plus 1, another new brand- Yu Yureka hit the Indian market on 12^th January 2015. It became a huge success and the table below depicts that. 

Yu Yureka is marketed by Micromax and exclusively available on Amazon on subscription. The Yu Yureka phablet has 5.5 inches of big display loaded with robust hardware and runs on CyanogenMod Android 4.4.4 (KitKat). CyanogenMod is an open source operating system for the smartphone and tablet, developed on Android base. Without going to any further specification of Yu Yureka, we will straight away discuss the marketing strategy adopted by Micromax and Amazon to compete with other brands.

                      1) Penetration Pricing   2) Flash sale

PENETRATION PRICING:

If we think about launching new product or service- two broad pricing strategy comes into mind 1) price skimming & 2) penetration pricing. The basic difference between these two strategies are the initial price. In case of Price skimming- the initial price is set high and the major chunk of revenue comes from the innovators and early adopters segments and gradually the price decreases. Whereas launch price is set low in case of penetration pricing strategy (introduction phase of Product Life Cycle) and in the growth phase the price is increased to a certain level. And the company earns more revenue and captures market share by selling more number of units during the introduction phase.

Penetration pricing help companies from two different fronts and they are:

1)      Customer Front:

a.       It helps to grow the customer base and revenue

b.      It lures the customers from high-price competitors

2)      Supplier Front:

a.       Higher volume sales lead to higher production and it could lead towards economy of scale

b.      And by bulk purchase from suppliers, company could avail discount

Yu Yureka is now available for INR 8,999, the launch price but the actual price is INR 12,4999. The competition in the budget smartphone is fierce and the major players are Moto E 2^nd generation (INR 6,999), Asus Zenfone 5-8GB variant (INR 7,999), Lenovo A6000 (INR 6,999), Redmi 2 (INR 6,999), Redmi Note 4G (INR 9,999) etc. Being a Chinese brand, Yu is providing products at a very competitive price and catering to the price sensitive Indian customers properly.

FLASH SALES:

Flash sale, popularly known as daily deals is a strategy used by retailer to 1) build brand loyalty and also to 2) liquidate the surplus inventory. It has been used by fashion retailers. In this type of sales for a limited period products and services are available at a very low price so it lures the customers and no doubt, it generates the excitement among the retailer buyers. Providing daily deals, deals for a limited period are growing trend in e-retailing. In India, Flipkart has tried this flash sales strategy for electronics products like Moto G, Moto G 2^nd generation, Moto E and the response was very good from the Indian customers. The Big Billion-Day sales of Flipkart on 6^th October 2014 is an example of flash sales.

Amazon used this strategy to launch Yu Yureka so that the excitement level among the customers remains high.

  

Looking into the demand of Yu Yureka we can say that, the strategy has worked for them. But the big question is whether the demand will remain same after the end of the flash sales?