Mexican Faceoff

In recent times, we see strong declamations from major electronics brands stating that e-commerce players such as Flipkart and Snapdeal do not have authority to sell their products at a lower price and that any products purchased from such players. E-commerce players have retorted that the decision lies with the customer’s preferences and that products purchased from them are genuine and will enjoy any warranties or privileges accorded to other customers. Apart from brands who dont have a classic retail presence, even major chains who have an offline and online model(Landmark, Croma, Shoppers Stop and Reliance Retail comes to mind) are losing money because many folks choose to check out the products at their store and then check prices online to get a better deal online.

Integrated Approach, which isnt really working

Integrated Approach, which isnt really working

This is a trend which is true not just in India but has been prevalent for quite a while abroad( in fact the correct term is showrooming and was associated with Amazon for quite some time , till specific tax laws were brought in to help retailers). The point missed by most people is that digital and brick and mortar are not quite separate and not quite integrated as well. A lot of major chains imagine that they can follow an integrated approach where a person visits their stores to get an idea of the look and feel but can also buy online. However with a proliferation of e-commerce platforms and marketplaces in India, that concept has been laid to rest.

Customer Cycle

Customer Cycle

The important point for brands to consider is ” Who does the customer remember and turn to, at the end?” . By purchasing a product at a lower price on an e-commerce platform, the loss for the brand is two fold – loss of margins in terms of payments made to the ecommerce platform and gateway and more importantly, dilution of the brand as it gets labelled as a discount brand.This is a factor already seen across apparel brands where folks seem to wait more for the seasonal End of Season Sale rather than actually peruse the new collections and purchase them when they want. This commoditization of the brand means long term doom as over time, there is little to differentiate the brand and its products from others in the market, specifically new comers from the Far East or other stretches of the world.

The second important point is that most brands forget that the entire purchase is an experiential point. We reach out to customers at multiple touch points in their life. And each touchpoint is important to maintain the same customer experience so that over time, the customer builds a certain image of the brand in his/her mind and retains a perception of the entire purchase. By tying up with e-commerce platforms, brands lose control over an important aspect of the purchase cycle and over time, the brand loses a chance to impress the customer.

Its time for brands to move to a different model, where information is easily available both in store and online and the purchase process is made far simpler. For that, brands need to make an investment in upgrading Point-of-sale systems, educating their staff and working in tandem with technology providers and financial systems to make the purchase experience seamless and simplistic for customers. To a certain extent, e-commerce platforms can lure a customer through discounts , taking the risk of the payment on themselves through Cash on Delivery, and by regularly reaching out to customers digitally. But brands have a far greater weapon – creativity and control over the product. At the end of the day, its the product which sells. The day it moves to becoming a commodity, like salt / sugar, where brand doesnt matter, the brand loses all value.

P.S: Feel free to share your thoughts and comments

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