Decoding the way ahead for the consumer electronics category from an online commerce perspective

June 8, 2020 11:24 AM

According to Amazon, dishwashers sold 31 times more than pre-Covid-19 levels and robotic vacuums sold 33 times more compared to before the lockdown.

Consumer electronics as a category has always been big on online marketplaces.Consumer electronics as a category has always been big on online marketplaces.

By Sabiha Khan and Sahil Shah

Over 60 days of lockdown, a massive slump in business, and giant bouts of uncertainty looming large on all our heads – it’s a scenario we all relate to and understand only too well. The economy has been hit really hard and according to industry experts one way to revival is for brands and retailers to tap into the surge of demand for online commerce that has been induced by the lockdown. The accelerated boost in e-commerce (from existing and new online customers) that has been noticed due to the lockdown is an opportunity that one should leverage. If the question ‘how’ popped in your mind, read on. 

Consumer Electronics – Non-essential bust? 

Consumer electronics as a category has always been big on online marketplaces. Now contrary to popular opinion, consumers have not just been turning to e-commerce for essentials but also non-essentials. While there were fears that due to the restrictions imposed on non-essentials, growth in this category had slumped majorly, there is enough and more evidence showcasing significant recovery. According to research from Forrester, a recovery rate of 35% was noticed in the first week of lockdown 3.0, with order volumes increasing significantly. Searches on Google for Air-conditioners, Smart TV prices, big screen TVs, dishwashers, have been on the rise, and this fact is corroborated by the fact that brands are also seeing inquiries coming in for these products as well as searches on online marketplaces for these products are increasing. Interestingly, according to Amazon, dishwashers sold 31 times more than pre-Covid-19 levels and robotic vacuums sold 33 times more compared to before the lockdown. With salons shut, search for trimmers increased 4.5 times on Flipkart and PayTm Mall saw an overall increase of 1.5 times in demand for consumer electronics overall. 

Consumer Trends – The Post-Covid Difference 

A lot has shifted for the regular Indian consumer in terms of behaviour as well as preferences. Understanding these trends can help brands decide which products to focus on and leverage online. 

  • The need to work-from-home/ learn-from-home has resulted in the need for investments in additional work-systems particularly for larger families that operated only on one work system until now 
  • There is an emergence of a new kind of ‘Home essentials’ category – Non essential products for a lot of people like ovens, microwaves, dishwashers, eyebrow upper-lip hair removal pens, epilators, have now turned essential due to social distancing norms that prevent access to human assistance, thus giving rise to the need for “chore convenience” 
  • Home entertainment is no longer a luxury but more a necessity and will continue to emerge as a key area, as people will continue to take precautions with respect to stepping out in public 
  • Consumers will be anxious where installations/ demos and maintenance/ servicing is concerned. Hence, online tutorials to fix products, remote access checking, safety stipulations, etc. may become the norm because of long term social distancing 
  • Authenticity of products will continue to remain a concern and consumers will seek ways to assure themselves of the same 
  • Due to financial constraints, consumers may look at a down-grade in terms of product purchase 

Apart from this there is now a wave of first time online buyers who showcase some differences compared to the regular online buyers: 

  • First time online buyers will be more prone towards low-to medium ticket size products and using cash-on-delivery rather than a prepaid service. Additionally, they will need hand- holding wrt online financial options to convince them towards larger ticket items 
  • Possibly they will be comfortable with vernacular languages and will be from Tier II/III cities 
  • Will be shopping online through a mobile phone and hence data used/ time to load/ ease of navigation/ product photos/ etc. will become extremely important 

How can brands navigate through the storm online? 

There is clearly a propulsion where the e-commerce market for consumer electronics is concerned. Products that seemed not so popular (dishwashers/ robotic vacuum cleaners) have started increasing in relevance for consumers. So how does one take advantage? 

  • Definitely get your hygiene in place: While this may seem like the most mundane of things to do, it is the most important of all, especially to improve discoverability. Make sure your A+ content is in place and your brand stores across online marketplaces are updated. Shoppers like to make informed purchases. As a brand, make sure you identify highlights and lowlights of your products from reviews, compile or update an existing list of frequently asked questions, and respond to customers as they reach out. 
  • Solve Warehousing in the short term and plan for Omnichannel in the long term: Of the many reasons online consumers give for abandoning their cart, some of the most common excuses revolve around problems with fulfillment. As such leveraging automation and third-party logistics including opting for marketplace driven options like (Fulfilled by Amazon) to take care of supply chain issues would be beneficial. In the long term, consider going omnichannel (like MI) and adopting multiple fulfillment options. One way to go omni- channel could be through establishment of specific OR conversion of certain non- performing retail outlets into “dark stores” or “hybrid stores”, to facilitate a ‘click and collect’ model of order fulfillment.
  • Ensure your digital content addresses consumer concerns: Instill consumer confidence by communicating the adoption of safety measures especially with respect to contact-less delivery + contact-less installation and contact-less servicing. For example, brands like Sony, Samsung, Panasonic, Haier and Godrej Appliances, etc. are leveraging Livechat, WhatsApp, DIY video as well as on-call assistance, on a real-time basis and also putting up content for consumers to check on their appliances themselves. Additionally, do not wait for the tide to turn, act now to stay top-of mind by encouraging consumers towards a call to action like for example, encouraging them to “add to wishlist” or provide a pre-booking incentive. 
  • Leverage Vernacular + Colloquialism effectively: It is important to understand how the audience is referring to your products or what is the colloquial way in which they refer to a particular product so as to capture that in your search keywords online. For example: Racold innovatively deployed a phonetically influenced keyword strategy based on the search input of its audience looking for geysers online. This has now become a regular practice on Amazon. Here’s the casetudy. Also, be on the lookout for more vernacular languages adoption; for instance, Paytm Mall has around 10 languages in which listings can be accessed, thus opening new markets/ opportunities. 
  • Go PWAMP, Go Mobile: We all know that mobile is going to be the key facilitator for online commerce, so focus on getting a mobile first ecommerce strategy in place. Progressive Web Apps + Accelerated Mobile Pages together drive efficiency of page loads & effectiveness of better commerce. Thus, use this advanced technology to create websites that have the look and feel of a mobile app and can be accessed with or without the mobile app installation. Plus, increase SEO thereby discoverability, as Google algorithm recognizes and promotes such pages faster. Also, on owned platforms, leverage 360 images, high definition photos + product videos which can help understand the product better by taking into consideration both screen size and screen resolution – especially for high ticket appliances like refrigerators/ smart TVs, etc. 
  • Bring your offline retailers and distributors online: Recognize digital as a key element in your consumer journey. By bringing your offline retailers and distributors online you can facilitate e-commerce avenues for them which in turn helps build better relations. Samsung is a frontrunner in this and has facilitated many digital interventions for its offline retailers to help them take advantage of the online demand. 
  • Owned versus Marketplace: Yes, you should have an ecommerce operation that belongs to the brand. The primary reason for this is data. When a customer directly buys online from you, it helps you to collect first-party data that you may utilize to personalize your marketing efforts including after-sales efforts (servicing reminders, software upgrades, etc.) which are very crucial in the consumer electronics industry. If you are existing in a high ASP category and have a range of products, then you must think of building first party data & a CRM around it. Brands that treat data seriously will survive in the digital economy in the long run. There will be no third-party data in the future as privacy increasingly becomes a concern across the world and in India. And besides data, an owned platform also earns a fair amount of trust from the consumer while the brand is able to give a competition free, customised and fully branded experience on its website/app. Samsung & MI are two brands that have made some decent in-roads into their own platform creation; akin to a long term strategy in mind.
  • Threat of Private Label Brands: Online retail partners (like Amazon) have increasingly started offering private label products which were originally manufactured by established brands. This trend is noticed very strongly among kitchen appliances, home electronics, and personal electronics where the consumer is looking for better value and is not necessarily brand loyal. Hence, by selling directly to consumers some of this threat can be mitigated. 
  • Go for outcome based media: From now onwards, look at every rupee spent from a ROI point of view – which means all your digital marketing efforts should drive intent and in- market consumers to take action. Additionally, the digital spends mix should have a significant part allocated to spends on eComm platforms. Besides search there are lots of in-market audience ads once can opt for, on the platform and even off it. For instance, through partnerships like Flipkart X Disney Hotstar one can target Flipkart audiences on Disney Hotstar’s Content or using the upcoming Amazon DSP to leverage the most realistic in-market audiences across the internet. Essentially, look at all spends that drive incremental or exponential growth for your business. 

Conclusion 

With Consumer Electronics projected to grow at 11% CAGR till 2025 in India; eCommerce with its almost double-digit growth of 20% CAGR will play a significant role. And not just that, we strongly feel that a large portion of the Consumer Electronics business is going to be influenced by digital and we advise you to think very hard on all aspects of “digital enabled commerce” and take that moonshot, now, more than ever! Also, while you spruce up your digital commerce efforts, keep an eye out for niche opportunities with respect to re-commerce or resale/ renting of products, given the emerging consumer needs. 

Lastly, in the words of Bob Willett, former president of Best Buy International – “The sooner we drop the ‘e’ out of ‘e-commerce’ and just call it commerce, the better.” Too many of us feel daunted by the term “e-commerce” and as such treat it as a separate entity when you should actually be including it as a part of your business as usual. #EcommerceEssentialHai, just has some different rules but it definitely deserves a valid seat at the table.

Sabiha Khan is VP, strategy, planning and new business of WATConsult while Sahil Shah is executive vice president, WATConsult

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