The not-in-stores advantage

By: | Published: February 24, 2015 12:02 AM

A host of brands have chosen to go for exclusive deals with e-commerce platforms. And the strategy is paying off with word-of-mouth creating the necessary buzz online and offline

Burger King India, one of the world’s largest fast food companies, opened its first retail outlet in India in November 2014, but only after a three-day exclusive partnership with eBay India. The chain, known best for its juicy Whopper Burgers, sold 1200 redeemable coupons of the Whopper on eBay in the first three days. Needless to say, this wave of first-selling on e-commerce platforms is a contagious one. It first started with the handset makers, then went on to other electronic items, caught on to fashion and apparel, and has finally hit the fast moving consumer goods (FMCG).

The reasons are not far to seek. In a cluttered market where every brand is crying hoarse about the so-called advantages of its respective product, it is increasingly becoming difficult to stand out and catch the customer’s eye. In such a situation, it is the e-commerce platform that is able to give these brands that leg-up that they desperately seek to stay ahead of the pack.

“Typically, one doesn’t expect an FMCG company to launch a food and beverage brand like a drink or biscuit on an e-commerce platform. The per piece cost is relatively low compared to a mobile handset. Yet it’s a great tactical marketing strategy in a segment that is hyper-competitive and where there is a stiff fight to garner market share. New products can stand out, differentiate themselves and score mind space,” says Anita Nayyar, chief executive, India and South Asia at Havas Media Group.

The biggest advantage that an e-commerce platform offers is perhaps the exclusivity factor. CVL Srinivas, chief executive officer, GroupM India, part of WPP Plc, says that an exclusive deal with a single e-commerce site is a far easier way of hard-selling a new product than investing in traditional distribution channels.It builds up expectation and curiosity around the product, he says. “The exclusivity angle has to do with the commercial terms worked out by the brands with their e-commerce partners. Many of these sites, by themselves, have a captive audience and the brands in start-up mode have limited supply. That is why a standalone deal with one e-commerce firm makes sense rather than spreading themselves out too thin. The e-commerce company also promotes the product in a big way.”

The exclusivity clause also ensures that the website puts its weight behind the product, giving it a mighty marketing push, which otherwise may not have been possible for a newbie brand. For instance, when National Basketball Association (NBA) launched an exclusive store for merchandise on in May 2013, one of the factors that helped clinch the deal was Jabong’s readiness to walk the talk. Says Yannick Colaco, managing director, NBA, “An e-commerce store provides us the opportunity to reach all our fans and allow them to support their favourite teams and players.”

He added, “ has shown a long-term commitment to building the NBA’s merchandise business by activating across our grassroots events, marketing programmes and media assets to reach our fans.”

The “web first” strategy got mainstream when in September last year, beverage company Coca-Cola India launched its Coke Zero on Amazon before it went into mass retail. The brand sold over one lakh cans, in 13 days of sale on the site. A Coca-Cola spokesperson said that the exclusivity with Amazon was aimed at creating excitement in a category which is fairly traditional and based on impulse purchase. Exploring e-commerce channels fits in well with the brand’s strategy of making the right pack available at the right price, and linking it to the right occasion.

And the results are showing. “Coke Zero recorded the highest sales for beverages on an e-commerce platform last September. What’s more, the buzz it generated online and offline ensured that all its target audience and potential customers knew that Coke Zero had launched in India. It achieved its objectives in a tactical marketing move,” says Anita Nayyar, chief executive, India and South Asia at Havas Media Group.

That is exactly what biscuit company Britannia aimed to achieve when it chose to launch its premium offering Good Day Chunkies on the Amazon website instead of hawking it across every kirana store in the country. Priced at R50 for six cookies, it was Britannia’s most expensive product and the target customer was the urban, experience seeking young adult. Therefore, Amazon’s gourmet and specialty foods store was the perfect platform for it. As Ali Harris Shere, director marketing—Britannia, says, “With Amazon, we found an excellent partner, an e-commerce firm with expertise in food retail. With this initiative, we aimed at reaching out to our target audience with a great deal of speed. The response from our consumers was great; we sold 32,000 packs even before a full-fledged launch in our traditional sales channels.”

Online-BonanzaSpeed to market is definitely an essential where a competitor can come up with a similar product within a matter of weeks if not months. This is especially true in the case of handsets where every second day a new brand or variant is launched. Therefore, selling online and that too on only one website allows it to reach out to the maximum number of customers in the minimum possible time along with the attendant “here or nowhere” mileage. That has worked out to be a winning formula as many handset brands have found out.

Harish Bijoor, business strategist and consultant, asserts that an e-commerce platform is non-intrusive and sees natural traffic—in other words—people who are genuinely interested in the product. “An e-commerce portal is nothing but an electronic mall. It builds expectation, and the product up for launch sees long queues and is sought after. The launched product gets solus position on the site and handset manufacturers have made the most of it in terms of popularity and promotions.”

For instance, when Chinese handset maker Xiaomi announced its entry into the Indian market in July last year, through e-commerce platform Flipkart, its “MI3” model stock was sold out within five seconds of hitting the website. Similarly, when handset maker Motorola re-entered the Indian market last year it chose an e-commerce only model, via Flipkart. There were six phones sold every minute on Flipkart, at the time of launch. Flipkart calls Motorola and Xiaomi two of its most successful partnerships of year 2014. Michael Adnani, vice president—retail and head – brand alliances at Flipkart says that till date,over 3 million Motorola handsets and over 1 million Xiaomi phones have been sold via these exclusive partnerships.

Similarly, Lenovo has launched several exclusive tablets and smartphones on e-commerce platforms choosing a different website for each product. While it chose Snapdeal for its A7-10 tab, it went with Flipkart for its Vibe series of smartphones—Vibe Z2Pro and Vibe X2 last year and the more affordable Snapdragon powered 4G LTE smartphone,LenovoA6000. “The key advantage Flipkart brings to the table is its extensive reach and ability to make the products available on day one, which otherwise might take up to a week via traditional distribution,” said Sudhin Mathur, director—smartphones, Lenovo India.

A big plus is the near zero investment in advertising. There is unprecedented word of mouth with such launches, which is a big help for a brand with a small budget. “The word-of-mouth helps in generating buzz, driving engagement, conversations, discussions and delibera- tion. This mileage is invaluable to brands today given the cluttered-competitive scenario across categories. Further it is cemented with the fact that web-first is increasingly mobile first, giving the brand direct access to the customer,” points out Nayyar.

The virtual world easily does away with some of the impediments of the real world as it helps remove distribution hassles and helps build economies of scale. Instead of starting stores from scratch, hiring talent and getting past regulatory hurdles, international retail brands use e-commerce as a launch pad to jet-set their offerings. Lifestyle and apparel brands such as Dorothy Perkins and Miss Selfridges made their debut via and others such as Raised on Denim, Stanley Kane and River Island, Scotch and Soda came via fashion portal Arvind Singhal, chairman, Technopak Advisors, a retail advisory firm, says  an e-commerce platform offers the quickest reach for many of the international fashion brands. They can test waters and check out demand. Establishing a chain of critical stores in the brick and mortar world takes a lot of time, money and focus. “That said, many of these international fashion brands will in time work towards a sizeable offline presence as well. The kind of brand experience that they stand for is not feasible or suitably communicated through an online market place model,” he says. The strategy used by international brands has been adopted by Indian fashion brands too. Fashion platform Myntra has exclusive fashion merchandise from Indian celebrity and designer brands such as HRX by Hrithik Roshan, Indian by Manish Arora and Iinterpret by Anita Dongre.

A large part of the success of some of these exclusive tie-ups can be attributed to the small towns. Aspirations are high in the small towns of India but traditional distribution models cannot keep up. A lot of places don’t have premium malls and multiplexes, and those that do, don’t see that many footfalls. “People in smaller towns crave high-end products. Some of the international fashion brands can hard sell their products here, without the worry of a distribution system. Indian designers can launch exclusive merchandise for these markets,” says Praveen Sinha, founder and managing director at

Samir Kumar, director – category management, Amazon India, says the online platform has noted higher sales in the non-metros for super premium apparels. “There is higher affinity in these markets for products in the R5000- 20,000 band provided the labels are from known designers and brands as compared to new labels and designers. The current favourites on designer wear space are Satya Paul, Mandira Bedi, Bhaavya Bhatnagar, Quirkbox and Manish Arora.”

Agrees Britannia’s Shere who points out that its Chunkies Amazon experiment breaks conventional wisdom in sales of premium products. “We expected consumers from the metros, but serviced orders to many small towns ranging from Motihari in Bihar to Baramulla in Jammu &Kashmir. An initiative like this also ensures we can reach very specific target segments with specific offerings.”

E-commerce firms are certainly happy with the turn of events. The e-commerce market in India is likely to cross $6 billion in revenues in 2015, recording a 70% increase from a year ago. This makes India one of the fastest growing e-commerce markets in the Asia Pacific region. With over 50% of the e-commerce traffic coming from tier two and three towns today, these cities will become key participants in 2015, which in turn, will spur more of these exclusive launches and deals. Says Adnani of Flipkart, “We are constantly expanding our delivery capacity to make sure we can cater to as many towns and cities across India as possible.”

Amazon says that its number of exclusive tie-ups is only increasing. At present it has 2000-plus products on Kumar says it has launched a special “Exclusives” store in, one that houses all products that are exclusively sold via its marketplace. “Needless to say, the response from customers to these products has been beyond our wildest expectations. A case in point is the customer response that we received for Yureka smartphone model that went out of stock within seconds on the two sale days.”

For now at least, the “not in stores” strategy is certainly working.

** We sold 32,000 packs OF Good Day Chunkies even before a full-fledged launch via our traditional sales channels.” Ali Harris Shere, Director – marketing, Britannia.

** WE HAVE launched a special “Exclusives” store in, one that houses all products that are exclusively sold on OUR PORTAL.”
Samir Kumar, Director – category management, Amazon India

** Word-of-mouth helps in generating buzz, driving engagement, conversations, discussions and deliberation. This mileage is invaluable.”
Anita Nayyar, CEO, India & South Asia, Havas Media Group

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