Author: Rajiv Sheth, CEO & Creative Director, Just Scents Private Ltd.
With advent of lifestyle channels as well as international magazines coupled with increasing wealth and foreign travel in the last few decades, Indians became more aware of not only regular daily use brands but also premium brands. With the beginning of eCommerce era, shopping couldn’t have been more convenient than at a click of a button. Shoppers across the globe are increasingly turning to web to buy things they need and eCommerce culture has certainly changed the habits of people in a big way. Convenience coupled with on-time delivery right to your doorstep has a major influence on the shoppers. Not only rise in online sales of apparel, accessories, home furnishing, etc has been witnessed, but a considerable rise in buying of cosmetics and perfumes has also been evident. According to Euromonitor, fragrances in India are expected to increase by a value CAGR of 12% at constant 2014 prices during the forecast period 2014-2019. Growth will be driven by the increased usage of fragrances on a daily basis by consumers.
Often online stores offer prices that are much lower than what one finds at physical store. There are consumers who are always looking for interesting deals and online stores serve the purpose to a great extent. Also, customers being big bargain hunters, they hops across various malls and markets which is time consuming, but now can easily browse through dozens of different websites at one go to find the best price. Online business owners understand this and usually reduce the profit margin to get more customer acquisitions.
Further for brands too online presence is an added advantage. While the online operation cost is lower as compared to offline operational cost, it is also much easier for them to reach out to their potential customers. Various channels of marketing communication are beginning to expand and consumers are spending more time online and becoming digitally savvy. A lot of brands have embraced digital marketing from a creative point of view. They are asking important questions: what can we do creatively with these new digital channels to create excitement, evangelize brand culture and feed the fan community? Lot of beauty portals today are very much about community- people who identify with the cosmetics, lifestyle and their brand culture.
Shopping in the good old days was fun but could get tedious. Shopping online allows you to buy things without hurting your schedule. Often the experience of shopping for fragrances in-store is so challenging: the pushy salespeople and lack of education, not to mention your nose physically shuts down after you smell a 3-4 perfumes in a row and that perfume takes time to develop. Moreover, physical stores at times have a limited array of products while eCommerce helps the shop-hoppers the convenience of having a range of products on the portal. The convenience of testing products or making sample purchases before buying, especially cosmetics, is encouraging people to purchase more products online. Buying perfumes online is an increasing trend too. A lot of new fragrance brands are offering creative sampling solutions with home deliveries for testing at their own convenience. This trend is on the rise.
The increase in trend of buying online cosmetic products can also be attributed to the ‘Subscription based Beauty Boxes’ or ‘Scentbox’ in India & abroad. The concept is every month, boxes are filled with samples of new beauty products delivered to the consumer’s doorstep for a small subscription fee, giving consumers chance to try new products and brands before buying full sized products online. This model has given a great boost to local Indian brands.
Online shopping allows the brands as well as customers to test the newer area too. It may not be feasible for a brand to be physically present in certain locations but having an online presence cuts the barrier between the brand and the potential customer creating a win-win situation for both the brand and the customer.
Talking about the online shopping scenario in India, according to a report by IAMAI, Indian eCommerce market is valued at about Rupees 81,525 crore in 2014 and is expected to cross INR 1,00,000 by end of 2015. While no particular data is available for e-tailing of cosmetics, segments like apparels, footwear and personal items; it is an industry of about INR 5000 Crores. ASSOCHAM 2012 report, expects Indian fragrance industry to be worth $5B with flavor and F&F ingredient being another $11B by 2015. Further as per a recent study by Google, it has been observed that women were responsible for driving growth in categories like apparels, beauty and skincare, home furnishing, baby products and jewelry. Looking at the growth trends of the categories, the report also projected that 40 million women are estimated to shop online in India by 2016. According to a global Nielsen report, there has been a five-fold growth in eCommerce sales in past one year for skin care, baby nursing, make-up, deodorants and cosmetics with eCommerce accounting for 5.2% of global FMCG sales by 2016, up from 3.7%. Asia will be the next major growth market.
Summing it up, India has a very rich history of perfumes but the sector is relatively un-organised. FFDC report notes that India has 10% share in global F&F market while we constitute 17.8% of world population indicating immense potential for growth and expansion. While the government is making attempts to revive the industry, it is the new-age eCommerce and young entrepreneurs who can actually revolutionize the industry and help it achieve its true potential.
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