Flushed with funds, e-commerce giants such as Amazon, Flipkart and Paytm Mall and other category leaders have launched full-fledged marketing campaigns to widen their market penetration and increase the revenue run rate.
According to top media agencies, the e-commerce platforms are expected to spend 12% more on marketing this festive season.
The e-commerce advertising war is expected to be primarily fuelled by US giants Amazon and Walmart. With Walmartâs acquisition of Flipkart earlier this year, the dollar burning rate of Flipkart is at an all-time high and Amazon would leave no stone unturned to match it.
Other category leaders such as Zomato, Swiggy and Big Basket are also likely to spend big. Several players have launched their TV campaigns and picked up top spots during prime time. "The frequency of e-commerce ads, especially of Flipkart, Amazon and Swiggy, has picked up dramatically in the last one month. The momentum is likely to continue till the end of the festive season," a marketing expert said.
Almost 40% of all retail sales happen during the festive season and, therefore, much of the marketing monies are also directed towards these four to five months.
"The festive season accounts for almost 35-40% of all retail sales in India. So, this is a big season for everybody and is typically a season where companies spend a lot on marketing. Last year, Flipkartâs spends on marketing during the festive season was on the lower side because they were not able to raise funds. On the other hand, Amazon spent a lot last year and they will continue this year. But this time both the companies donât have a fund crunch, so they are going to spend a lot on marketing during the festive season,â said Satish Meena, Senior Forecast Analyst, Forrester.
âThe Dentsu Ageis Network expectation is that this calendar year, when compared to the last calendar year, we will see an overall growth of about 11-12%. But one difference between now versus a few years ago is that the rate of growth of different media is now substantially different. So earlier if the growth was say 10%, then some media might grow at 8% and some other media would grow at 11%. Now, digital is growing at 25-30%, while print has a low single digital growth and television is growing at 10-11%. So, the range of the rate of growth of individual media has significantly changed compared to the past,â said Ashish Bhasin, Chairman and CEO, South Asia, Dentsu Aegis Network.
When compared to last year, consumer sentiment on spending has also improved this year.
âThis festive season is going to be much better than last year, both in terms of spending and also the kind of offers and discounts e-commerce platforms will give to consumers. Last year because of GST and the lingering effects of demonetisation, the consumer sentiment wasnât much on spending. Also a lot of spending happened pre-GST last year. So, this year we are expecting much better spending from customers and online retailers are also going to do much better than they did last year,â said Meena.
Owing to a good monsoon in many parts of the country, rural demand for many categories is also expected to pick up this season.
âMonsoon, this year, has been more or less okay in many parts of the country and so there is hope that the rural demand will start picking up in many categories. The urban markets are saturated but there is still a fair amount of headroom for growth in tier II, III and IV towns and villages. All in all, there is an atmosphere of cautious optimism,â said Bhasin.
To improve their reach in tier II and III towns, Amazon has also has also introduced a Hindi interface.
âOur aim is to increase our reach and serve more customers in the country while making online shopping a daily habit for Indians. We go where our customers are and hence ventured even to the untouched cities of the country â widely covering tier II, tier III and below geographies through our integrated campaigns. We have seen significant expansion in India with focus on not only growing the existing customersâ share of wallet, purchase frequency but also in driving incremental new reach and penetration through market expansion. One such example of such innovation is Amazon Easy. Customers can walk into the neighbourhood Amazon Easy store for assistance while shopping on Amazon.in,â said Ravi Desai, Director Mass and Brand Marketing, Amazon India.