How e-commerce companies make you spend more

Marketing is key to any business. But in e-commerce, it's essential for not just reaching out to customers and driving business to the platform but also establishing the brand for the long term.

The other day I was checking out new stuff on Myntra when I spotted a skirt that I liked. After checking the details I moved on. Later, when I went to Facebook to see what my family and friends were up to, I was pleasantly surprised to see a Myntra ad displaying the same skirt as part of a selection. I even noticed an email from Myntra about the same skirt. The same ad kept appearing even when I surfed news websites. Tempted, I ended up buying that skirt.

This was not a coincidence though. Gunjan Soni, Chief Marketing Officer at Myntra and Head of Jabong, says, “We use social media for targeted ads as they give double the ROI – you reach out to the user wherever they are.”

The ads don't stop after a sale has been completed. You might see ads of selections similar to the earlier one again and again – through a technique called retargeting. Gunjan explains, “We cherry-pick our high performing selections based on brands, and use social media to target people who have shown interest in any of these brands or similar ones. These give higher conversion.”

Marketing is key to any business. But how does it work in e-commerce?

Retail versus e-tail marketing

Marketing is about reaching out to customers and driving business to the platform – whether offline or online. But in online retail, marketing is also about establishing the brand for the long term.

Offline retail players can create massive differentiation through their in-store experience – something that online retailers have limited scope for. E-commerce players focus much more on functional factors like product, range, price, and delivery.

Of course, the environment is very dynamic in e-commerce marketing. Harneet Singh, VP and Head of Marketing, ShopClues, says, “Consumers search across platforms to find the best products and deals. We call it ‘click-away marketing’. Since consumers tend to check out our competitors, we have to be more competitive.”

E-commerce players can track where the customers are coming from. But according to branding and marketing expert Meeta Malhotra, this only exacerbates their focus on getting CTR (click through rate), and they often lose sight of the brand. “It’s very hard for offline players to track the source of footfalls at all times; so their marketing tends to be much more brand-driven,” she says.

Due to direct interaction with the seller, trust is easily built offline but needs a lot of effort online. “If something goes wrong with the product, the consumer wants to know if the platform will protect them. Policies on returns and customer engagement address this problem,” says Harneet of ShopClues.

Online furniture marketplace Pepperfry follows a detailed marketing strategy. “The Indian consumer today starts the online shopping journey with research. We want to be present when they are looking for an item. We ensure that our two or three key propositions – like value, variety, and service – are established very strongly in our marketing,” says Kashyap Vadapalli, CMO, Pepperfry.

The online consumer is as varied as the offline consumer – some of them are looking for best prices, and some for the most choices.

According to Kashyap, Pepperfry's goal is to shift people from buying furniture from unorganised players to online. He claims that their marketing efforts have raised awareness levels among customers by about 80 percent.

Digital marketing

Of all the customer acquisition channels, digital marketing is the most important for e-commerce. E-tailers target active online shoppers – who research for their favourite items – by using performance marketing channels such as SEO, SEM, Social, Product Advertising, and Re-marketing.

“We have a very sharply defined target group (SEC A+ audiences in the top eight metros), and hence, our media strategy is based on arriving at the optimum mix of media vehicles (TV, Digital etc.) to help us create maximum impact amongst them,” says Kashyap of Pepperfry.

Targeting individual users with specific offers is called performance marketing. Install marketing is also a part of performance marketing – some ads are for existing users on the app, or for attracting them on m-web, while with others, it's to get individuals to download the app. Similar techniques are used for both.

Although Facebook and Google are the leaders of digital marketing, Meeta says that the duopoly is hurting e-commerce companies. “Organic reach from digital marketing has crashed. That’s why so many e-commerce players advertise on TV. In India, TV can get you a lower customer acquisition cost (CAC) than digital marketing,” she says.

On a given webpage, only three Google ads can be run. The rest of the ads are fired by ad networks through pop-ups, sliders etc. This is predominantly general digital marketing; it gets traffic on the website and app regularly. (But it costs up to Rs 40 lakh per month to advertise on Google.)

Google and Facebook also do re-targeting. Video ads are taking over Facebook, Twitter and Instagram now, and the demand is increasing. A C2C e-commerce platform like Kraftly’s marketing budget makes up 25-30 percent of its total expense annually – out of which 90 percent goes to social media. There are also different formats like influencer marketing, wherein influencers promote through their blogs, social media accounts, and other avenues.

For new launches or festive sales, ‘burst campaigns’ provide aggressive media marketing over a few days. It has a bigger impact on e-commerce, especially during festive season sales like Flipkart's Big Billion Days and Amazon's Great Indian Festival. Mature brands do this three or four times a year, for over 5-19 days at a time, for a 360-degree visibility.

Collecting the right data

Every search by a customer yields data on why they came there, which category they expanded, which subcategories they looked for, which search keywords led them to the website, and so on. This also tells you the customers’ tastes, purchase history, and what they like and dislike, based on reviews. All of these contribute to social media promotions, as most users have connected with their social media ids.

Facebook does not share data anymore, as it did three years ago, says Srikanth Velamakani, Founder and CEO of Fractal Analysis. “But if I have data on your last 20 likes on Facebook, it will tell us your favourite movies, music, stars, politics – all automated,” he adds.

At ShopClues, Harneet says that customers’ browsing and purchase patterns, their interests, cart additions, and other factors are noted, and those segments of consumers are put into various buckets. “There are hundreds of such segments we have created in our customer base, which helps us do focused targeting and micro marketing on consumers. This has majorly helped conversion and ROI on marketing expenses,” he adds. Their rate of SMS and email communication to the targeted customer base is almost double of that to the untargeted one, as is the conversion rate.

He explains, “We identify definite products that people buy once they have bought something in a particular category. This has helped us generate a lot of business by doing that kind of attribution on our customers.”

Cookie business

Websites’ cookies capture information on what you check out on computers. An average webpage has 30 tracking devices to find out who you are. Some cookies are common between all the pages you go to. So, if a cookie is common between two websites you checked out – say Jabong’s page and Jet Airways’ – you are retargeted. Their ads are shown on each other’s websites to bring you back to buy the product that you had checked out earlier. They also show other things you might like. Srikanth explains,

“If you want to buy a cell phone, and it knows what model you bought last, it will show you the upgraded version. If done well, the customer will be impressed that the website understands him very well.”

Mobile app marketing has to be done even more carefully. It is harder to retarget by cookies; apps are often uninstalled due to continuous ads.

Geo-location matters too. If you are checking out Kannada movies on the website, you will get suggestions of idli makers rather than roti makers. Srikanth says, “Based on your browsing from two different cities, it will understand that you travel a lot. So it can show you what is relevant – like MakeMyTrip ads on YouTube.”

Measuring effectiveness

The best metric for tracking effectiveness of a campaign for an online retailer is organic traffic. In digital marketing, you are able to attribute every click and re-track the consumer and from which channel they came. Direct marketing, Google search, and social media marketing are easily attributable. The attribution marketing model helps segregate efforts between various channels. Says Harneet,

“On those who are directly exposed to our impressions on various channels over a particular duration – we can attribute that to the one particular channel after removing the duplication.”

But the million-dollar question is: How do you find out which channel to use to reach out to your customer? “It depends on the ROI of every channel,” says Harneet, adding, “If somebody is coming from search, we then reach out to them through social media and a combination of direct marketing and remarketing. Once we know which combination works best for us, we start optimising our investments for that.”

Besides the brand-led traffic on the website and the increase in conversion rates, for mobile, Pepperfry measures app success on the basis of MAUs (monthly active users). Kashyap says that they heavily monitor certain campaigns around app installs to see that the campaign is targeted towards someone who will use the app. “Television has been the most effective way for us to reach out to our target audience, so we continue to advertise,” says Kashyap.

Offline marketing for online retail

Offline marketing is also essential for e-commerce. TV is for mass brands – which explains why horizontal e-commerce players and large vertical ones advertise aggressively on TV. But among the traditional channels, the cheapest is radio.

Niche e-commerce player Kraftly does offline marketing activities with events such as La Feria, the biggest flea market in Chandigarh. Kraftly Chief Business Officer Akshay Ghulati says, “Our digital marketing activities are similar to what other marketplaces do. But a flea market is more effective, because we were showcasing unique products. The customers who check us out come to our website later.”

Kraftly has not done mass marketing so far. Says Akshay,

“We are creating an identity for our brand, and only after that will we decide how to market it. Recently, we sponsored a fashion show at NIFT. We got a lot of sign ups there. A lot of upcoming designers also notice us, to associate with later.”

Whenever there is a superhero movie, Kraftly targets that audience, as it has products relevant to that movie; the same goes for Comic Con. The good old ways of using flyers and stalls at relevant events are not useful for e-commerce. But expensive jacket ads on newspapers are essential for the festive season.

Gunjan of Myntra makes a strong point. "In e-commerce, you may have the best site and products, but since this is not a physical placement, unless somebody is knocking on the doors, you really can’t have sales. So the way we approach marketing is different – a lot more is driven by performance marketing, not just brand marketing,” she says.

Besides going to market by themselves, a lot of celebrities also do endorsements for Myntra as ambassadors for brand partners.

Up-to-date data

Data science is a very big opportunity for even small players. Every click adds up to massive data. Srikanth says that analytics is important after the growth stage. “Spend your money for not just customer acquisition, but to get more out of your existing customers too. Even basic analytics is useful when they are operating at such a large scale,” he adds.

ShopClues employs an in-house analytics team, not just because it is financially more viable, but because analytics is the intellectual property of the firm. “It is a core competence we can create with an understanding of the consumer. It is significant for marketing and research, and is hence confidential,” says Harneet. He adds that the company does predictive modelling now for channels that can give certain returns.

Pepperfry also uses in-house analytics to target consumers for optimum conversions. Kashyap says,

“Our data says that customers want to research on mobile, and purchase on desktop. So we treat our mobile properties as top of the funnel. The strategy is to be present across a wide swathe of keywords and properties related to the Home and Furniture category.”

But Srikanth warns that since ads are very expensive, you have to figure what part of marketing is working in terms of ROI and invest more in it.

Within online channels, 70 percent of Pepperfry’s budget is attributed towards search, which includes SEO, product listing, remarketing, SEM, and others. The rest is dedicated to social media and videos. Pepperfry spends 20-25 percent of marketing expenses on mobile, as it accounts for 50 percent of their daily traffic.

Future is now

Online retailers’ biggest challenge, the inability to provide touch and feel, is being solved too. For instance, Pepperfry has opened 14 offline studios. “They are strong marketing channels, with more than 50 percent conversion rates. We plan to scale the number of studios to 20 by the end of this quarter,” says Kashyap. Lenskart, Zivame, Firstcry, Urban Ladder, and Myntra have also followed this path.

For every penny spent on marketing, 10-15x return is expected. But according to media reports, e-commerce giant Amazon India lost Rs 1,724 crore in FY15 due to high advertising expenses. However, Amazon’s Aur Dikhao campaign of 2015 remains a favourite of advertising experts for its insight into Indian shoppers and the manner in which it aligned with Amazon's promise of a big selection. Flipkart’s Kids has been a success for the marketplace since 2011.

Marketing campaigns depend on your target consumers and the kind of engagement you want with them. For instance, ShopClues focuses on mass market brands, and so it engages with customers who go to local markets. “They are not brand conscious; utility matters to them. Understanding that, we are engaging with them,” says Harneet.

They say PR rules the world – and it stays true for e-commerce now more than ever.