From mobiles and tablets to TVs, gaming consoles, books and even homes, haute couture and hot dogs, brands are making a beeline for exclusive online launches, pre-orders and flash sales. But is the unique virtual gimmick for real?
WHEN XIAOMI made its Redmi 1S smartphone available on Flipkart, its exclusive retail partner in India, for sale for the sixth time on October 16, it managed to sell 1,00,000 units in just 4.2 seconds. That was the first time the Beijing-based company had made those many units of the popular entry-level Android smartphone up for grabs in the country.
The company’s budget Redmi 1S smartphone followed in the footsteps of Mi3, another hotseller from Xiaomi, breaking sales records with the entire inventory going out of stock within seconds in flash sales. As per a leading market researcher, Xiaomi has now replaced Huawei, a Chinese tech company, to become the world’s third-largest mobile phone vendor in terms of smartphones sold. It managed to sell 19 million smartphones in Q3 this year to leave behind Huawei that sold 16.8 million smartphones in the same period.
So what is this new buzz all about? As per industry observers, an important part of Xiaomi’s success has been the difficulty in getting its smartphones, with the measurement of sales for the company going in units per seconds rather than units per quarter. Xiaomi, which has expanded to eight markets in Asia, started selling phones in India in July exclusively through Flipkart, a strategy that has apparently taken the industry by storm.
It’s not that this marketing ploy is new. Flipkart started the trend with tech giant Motorola when the latter launched its Moto G smartphone in India in February. Motorola was among the first players in the world’s second-most populous market to exclusively adopt the online route to sell its devices. Since then, Motorola has launched several other devices—like its phones Moto E and Moto X (their second-generation models are also out in the market now), the Moto 360 smartwatch—exclusively on Flipkart. As per sources in Flipkart, Motorola has already sold more than two million smartphones since their launch.
“Exclusive associations (with brands) play a very significant role, as they help us create brand recall among customers. They also contribute towards further establishing our leadership as a strategic partner for all national and international brands interested in making a mark in India’s e-commerce industry,” says Michael Adnani, VP, retail, and head, brand alliances, Flipkart.
E-commerce is creating a lucrative market for brands that are looking for ways to increase customer engagement, Adnani explains. “The lack of boundaries, the growing base of people who have access to the Internet through affordable smartphones along with the ease of distribution that online channels offer over offline modes are all adding to the e-commerce wave,” he adds.
Indian e-commerce is projected to explode from the current $10 billion to $43 billion by 2018, as per Nomura’s India Internet Report released in July.
Soumitra Gupta, managing director and CEO, Oplus India, which sells its smartphones and tablets exclusively through the online marketplace Snapdeal.com, explains: “Online marketing enables us to reach a pan-India audience, which is in line with our business strategy. This also enables us to give the best price to the consumer directly and cut out any middlemen. Customers can see the product online, check the specs, price, compare with other products and make an informed decision.”
Oplus has brought out two products in the market in its first year: the XonPad 7 (a seven-inch tablet) and the XonPhone 5 (a five-inch smartphone). Its aim is to reach each and every part (tier II and III cities mostly) of the country. The rural market is well included in the network that Snapdeal has created, Gupta adds.
Devita Saraf, CEO and design head of VU Technologies, another tech company taking the online-only retail route, says: “The online platform has emerged conspicuously over the last few years as one of the primary mediums to augment the reach. There are numerous players in the e-commerce domain and every player has its own positives. We have aligned with different online players depending on the relevance of our products and their individual reach.”
The California-based luxury television company sells its 50-inch and 55-inch ultra HD TVs through Snapdeal.com, while it recently tied up with Flipkart to sell its 32-inch Android LED TVs. “We have had remarkable results in terms of getting responses from distant places where we are yet to mark our presence physically. Therefore, our strategies for each product vary and on the basis of its potential, we identify our most suitable partner,” Saraf adds.
Sky is the limit
Such is the online-exclusive retail wave that companies have toyed with an array of products to enter the market. Exclusive partnerships have now gone beyond mobile phones and tablets.
Under an exclusive tie-up between publisher Rupa and Amazon, President Pranab Mukherjee’s much-awaited book, The Dramatic Decade: The Indira Gandhi Years, will be available to buyers only on the e-commerce major’s website for the first 21 days after its launch on December 11.
In August, author Chetan Bhagat, too, had introduced his new book Half Girlfriend on Flipkart. Around the same time, Amazon India had announced that it has won exclusive rights to sell Microsoft’s Xbox gaming consoles and titles.
Amazon India is the exclusive retail partner for Microsoft’s entire interactive entertainment business portfolio, which includes Xbox One, Xbox 360, Kinect, Xbox Live, Xbox Accessories and all Microsoft-published Xbox game titles. “We are very excited about being the partner of choice for several brands that have launched their latest offerings exclusively on our site. This response from brands and sellers is proof of the value they see in associating with us,” says Samir Kumar, director, category management, Amazon India.
Amazon India is also the exclusive partner for the Philips Disney imaginative lighting range for kids and for the Micromax Canvas Android One. “Coke had launched Coke Zero in India exclusively on our marketplace for a limited period, while Waterlily LA, a premium leather handbag brand, headquartered in Los Angeles, made its India debut exclusively on the Amazon India marketplace and is still exclusive with us,” says Kumar. In addition, Amazon India also has exclusive launch deals with GOQii, Tommy Hilfiger luggage, Timex for their weekender range of watches, Blackberry Passport, etc. Just last week, Iba Halal Care, India’s first halal and vegan cosmetics brand, launched exclusively on Amazon.
Partnering with brands to be their exclusive sales partner seems to be the flavour of the season for e-commerce companies. Sometime ago, online marketplace major Snapdeal partnered with the Fashion Design Council of India (FDCI) to foray into the premium designer-wear segment. ‘The Designer Studio’ brings the finest designer labels to its customers, including names like Malini Ramani, Manish Arora, Ashish Soni, Varun Bahl and Samant Chauhan.
Prior to its grand opening in the national capital on November 9, American fast food restaurant chain Burger King teamed up with eBay allowing consumers to pre-order a ‘Whopper’ burger online for R128. Customers had the opportunity to place an order on eBay for a vegetarian, mutton or chicken Whopper between November 3 and 5. After receiving a voucher via courier, they could go to the store to receive their Whopper. As per Burger King, 540 chicken, 380 mutton and 240 vegetarian Whoppers were pre-ordered since the start of the promotional campaign.
“At eBay India, it is our constant endeavour to provide our customers with the largest, widest and the most unique products on our platform. We are the largest online shopping mall in the country with over three crore products from 2,000 categories across electronics, lifestyle, media and collectibles,” says Vidmay Naini, director and business head, eBay India.
With a global customer base of over 152 million logging on to eBay from 201 countries—including 4,500 cities, towns and villages in India—the online marketplace has found a ready platform for merchants of all sizes to explore the online route as part of their multi-channel strategy, adds Naini.
However, as the industry saw in the recent past, not everything has been hunky-dory—ensuring stock is one of the major challenges several e-com sites are facing. In case of the Moto G, Flipkart struggled to ensure an uninterrupted supply. An unpredictable demand was apparently one of the reasons behind the interruption. Flipkart did try to fix that issue with the launch of the Moto E. However, many consumers were left disappointed after seeing frequent ‘out-of-stock’ signs and long waiting periods. Such instances lead many consumers to visit brick-and-mortar stores, where, because of the offers galore, they end up buying some other product instead.
The fact remains that the adoption of the e-commerce platform will continue to grow at a rapid pace and more and more Indian consumers will experience the convenience of shopping online, says Adnani of Flipkart. “This platform is still very young and is going through many growing pains, including some of the technology challenges we have experienced in the recent past. However, e-commerce in India will continue to mature and today’s challenges will eventually fade away, leaving us with an efficient platform that offers the largest selection of products known to India, offered at the most affordable prices combined with a delightful and convenient way to shop.”
With respect to inventory challenges, it is important to point out that the burden of managing demand has always been and will continue to be on the brand’s side, says Adnani of Flipkart. “It is always a challenge for a brand to predict consumer demand in a new and growing market, independent of the platform they choose to sell on. We are confident that our rich data will help improve levels of inventory and guide brands to do a better job of forecasting future demands,” he adds.
“The convenience and product range that customers find online are the major reasons that customers prefer to shop online. While glitches dent consumer confidence, they help marketplaces to forecast demand better and beef up their processes to tackle such situations better in the future and regain the lost consumers’ faith in the industry on a micro as well as a macro level,” says Naini of eBay India.
However, Gupta of Oplus India clarifies: “We have never faced a problem where the customer has complained of not getting a product after placing an order on Snapdeal because we run an efficient supply chain. Ever since we started selling our products, we have never listed out of stock items or excess quantities, which ultimately led to what happened in the case of Flipkart recently.” Hope that doesn’t happen again.
We are excited about being the partner of choice for several brands that have launched their latest offerings exclusively on our site. This response from brands and sellers is proof of the value they see in associating with us – Samir Kumar, Director, Category management, Amazon India.
Exclusive associations (with brands) play a very significant role, as they help us create brand recall among customers. They also contribute towards further establishing our leadership as a strategic partner for brands – Michael Adnani, VP, retail, and head, brand alliances, Flipkart.
With a global customer base of 152 million, eBay has found a ready platform for merchants to explore the online route as part of their multi-channel strategy – Vidmay Naini, director and business head, eBay India