Digital spend by e-commerce companies will not reduce even from a brand perspective, according to Shamsuddin Jasani, MD, Isobar India, who was speaking with BestMediaInfo.com on the launch of Isobar Commerce Practice in India. However, he feels that the mainline spend will come down in the future.
Upbeat about growth of e-commerce in India, Jasani sees the growth coming from smaller towns and rural areas. “Another thing that is happening is that e-commerce is now largely being driven by category B and C towns where people don’t have a lot of access to big brands in stores,” he said.
“Discounting is not as big as it used to be and this is going to drive up profitability of e-commerce players,” said Jasani. “I really believe that five years down the line third-party e-commerce companies will be profitable. We are trying to see how we can keep the brand’s best interests in mind. What we are trying to do is map the entire ecosystem and make it profitable for brands to be leveraging e-commerce.”
After launching Isobar’s Global Commerce Practice in July last year, the agency has now announced the launch of Commerce Practice in India which will be headed by Shekhar Mhaskar, Vice-President, Isobar India. About 15% of the team at Isobar India is dedicated towards Isobar Commerce Practice right now.
The expansion of the Commerce Practice in India will help it become a commerce centre of excellence, delivering end-to-end commerce experiences for clients through integrated platforms and solutions that are informed by local insight.
What exactly is Commerce Practice?
It is a global practice that we have now launched in India. eCommera, a company that Dentsu Aegis acquired, has been rebranded as Isobar Commerce in India. They already have approximately 150 people in Pune who develop very large-scale development and strategy solutions for a lot of brands, especially in the UK, Europe and now in Northern America as well.
Commerce Practice is a global entity. What will Isobar Commerce Practice in India bring to the table?
In India, we need to have a mix of third-party and first-party commerce. What I mean by that is one has to have their own e-commerce platform while also leveraging the Amazon and Flipkarts of the world. What Isobar commerce in India will be doing is to work with our brands and clients to define the entire e-commerce ecosystem for clients in India.
Why bring a platform that caters to the needs of e-commerce players in India now?
E-commerce is booming. I really believe it is going to go the way that China is going. A lot of people are now coming onto e-commerce and buying on e-commerce. But a lot of brands are lost as to how to take advantage of this, ensure there is a distinction between how they do their e-commerce v/s how they do their off-line and also how to integrate the two and that is where Isobar Commerce Practice India comes in.
So will this division function out of the Pune office?
The way we have structured this is that we will be offering our clients the best across all the three brands under the Isobar umbrella. From a strategy and understanding the consumer perspective is where Isobar India will play the biggest role. The front-end development is where Fractal Ink will play the biggest role and back-end development is something Isobar Commerce Practice India will deliver. It will be primarily driven by our Mumbai office and supported by the Pune office.
E-commerce has changed a lot since its advent in India. A lot of consolidations have taken place since then but many major e-commerce players are losing money even today. Do you see the tide changing? What will be the face of digital five years down the line?
A lot of e-commerce companies are still at an investment stage and for the next couple of years, it is still going to be about a lot of investments and getting profitable. I really believe that five years down the line third-party e-commerce companies will be profitable. We are trying to see how we can keep the brand’s best interests in mind. What we are trying to do is map the entire ecosystem and make it profitable for brands to be leveraging e-commerce. As far as e-commerce third party vendors go, there might still be room for some consolidations in the horizon and there is still more room for a few more big players to come in. Paytm and Alibaba will step up their game as well. Slowly and steadily, over the next three to four years, they should start making money.
What do you think are the drivers for the growth of e-commerce in India?
The importance of e-commerce is going to go up where convenience is going to trump money. A big change that we are witnessing now is that discounting is not as big as it used to be and this is going to drive up profitability. Another thing that is happening is that e-commerce is now largely being driven by category B and C towns where people don’t have a lot of access to big brands in stores. They have the money but they can’t buy these brands from stores. Another bit of e-commerce where the biggest amount of expense is, the delivery and returns part. A lot of e-commerce players are now just establishing the groundwork for a supply chain. It is an expense but once the supply chain gets a lot better, e-commerce will have bright future in India.
As you rightly mentioned, discounts and sales on e-commerce are going down. Since e-commerce platforms spend a lot of money in marketing these discounts and sales, do you think this will have an effect on digital agencies?
There are two parts to the monies that are spent. One is ‘brand monies’ and the other is ‘performance monies’. Performance money is not going to go down. A lot of digital agencies work on the performance part of the business. What I do see consolidating is that one needs to spend a little more in the beginning to establish their brand, take it to the smaller towns and cities and talk about the sales that were to happen. Now with the price of data going down, more and more people are on digital and one can leverage digital itself to reach out to these audiences. Even from a brand perspective I don’t see it as a reduction in the digital spends but I do feel that the mainline spend will come down in the future.