Early stage eCommerce companies cannot ignore brand building communications

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A booming marketplace BUT growth challenges are significant

Over $750 million has been invested in the e-commerce sector by PE and VC funds over the last five- six years as investors attempted to ride a predicted boom in the online marketplace. E-commerce transactions touched Rs 8,146 crore in 2007, more than doubled to Rs 19,688 crore in 2009, and crossed Rs 45,000 crore in 2011, according to estimates by the Internet and the Mobile Association of India (Iamai).

Yet, despite the buzz around online retailing in India, the country does not feature even among the top 30 markets for online retail investment, according to consulting firm AT Kearney’s Global Retail E-commerce Index. Significantly low Internet penetration and poor financial and logistical infrastructure are major roadblocks to India’s entry into the index.

Also funding is increasingly becoming a challenge with funds starting to prefer the “safe bets” – i.e. the more visible who paradoxically are burning huge amounts of cash to attract customers to their portals.

About discount pricing and brand loyalty

As customer acquisition remains top priority, e-commerce companies are vying with each other with more and more aggressive promotions and pricing strategies! As discount mavericks rule the roost, it clearly doesn’t give the customer any reason to be loyal to any brand! Add to that, the high cost of mainstream advertising, wafer thin margins and elusive volumes. And they are stretching new entrepreneurs badly….

Lessons can be learnt from categories that experiments with such predatory pricingand promotional methods. Telecom and aviation are some examples. While in aviation, the upsurge of fares have started happening, in telecom the 1 paisa tariffs are no longer considered sustainable!

REMEMBER, these are sectors where promoters come with deep pockets, where theyalso spend large sums on Brand Building!

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Building brand loyalty – a survival Mantra for early stage e-commerce companies

So where does that leave the early stage ecommerce firms? While a prolonged price battle isn’t sustainable as customers have become “deal happy,” it seems that such companies will have to find a balance between “incentive based marketing” and Brand Building.

Eventually the questions we must ask is, are there ways to deal with the brand building challenge especially at the early stages… smartly and cost effectively?

There cannot be a zero budget marketing plan but certainly a communications program that can run at ¼ the cost of mainstream publicity channels…but it must be integrated to your marketing objectives.

7 tools to adopt for early stage e-commerce firms

1. Have a high intensity social media campaign in place –You must be present at all the places where your customers are. Engage them with your product details while also attempting to build the category. This is the place for your attractive marketing offers

2. Spend some money in a great creative work–Something that truly shakes up the online space where your campaign will play the most. A powerful theme with social messages to do with day-to-day lives of your customers, or a set of well crafted stories that talk about the unique heritage of your brand could be interesting ways to hold conversations with them. Here I am NOT talking about advertising campaigns but simply great creative that can embellish your digital media campaigns.

3. Develop a smart PR program to tell your story creatively and constantly–Have an efficient PR program in place. Set aside some budgets for cost effective media deals besides earned media spaces.

4. Use associations with large reputed partners and vendors to build credibility–Include images or logos of recognized third-party companies on the pages of your portal. These go a long way in giving potential customers a sense of security. An example is PayPal which gives visitors confidence to share personal details and purchase online. In addition to that, explore possibilities of working with credible and visible partners with whomyou can hold events and offline initiatives that are of interest to your customers too.

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5. Blog–Creating a blog that runs like a mini magazine can be a power tool. It is not necessary to get celebrities to associate but getting reputed authors in this space to run this property for you could be a sustainable cost efficient solution.

6. Build credibility by encouraging reviews–Don’t be afraid of bad ones. Listen, trawl and manage the reviews. One way to deal with bad reviews is to take the customer offline in real time and deal with his concerns. Get him to post a positive comment.

7. Think of ways to Enhance Customer experience–You may choose to use soft tools like a ‘shopping buddy’ or an ‘expert’ to answer any question customers may have on your product or their choices. Although you must have detailed product descriptions, it might be added incentive for your customer to have someone who they can turn to answer any questions. This builds added familiarity and helps to overcome any hesitation that a customer may have before he clicks the Pay button!

All the above tools need a certain expertise as well as require a degree of strategic clarity to get them right. Hope to see you at the session at IRE 2014 where we will discuss these tools in detail

About the Author: Devdarshan Chakrabortyy is the founder of StrongKofee Leadership Communications. After a 25 years long career with some of the largest Advertising and PR firms of the country, working as an advisor to large MNC, SMEs and startups, he now works with clients on Communications Strategy,, Leadership Skills and Communications Training.

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