The Indian Consumer
The Indian consumer is a bargain hunter. He/She is trained not to brand-loyal but to look for the best value proposition. Indians are expert hagglers – they will not settle for just any price. And this makes them a unique challenge. For relatively new commercial enterprises like Flipkart (the oldest of the lot, having been around for a decade now), Amazon (new by Indian standards) and Snapdeal (the middle kid in the age group), there is very little brand loyalty at this time. The three players are counting to build on that this holiday season by laying out a red carpet of deals and services unlike any other.
In the most recent Festival shopping bonanza from the three key players in September, each made a unique claim that showed that they were doing well. Industry data shows that Flipkart is still the leader followed by a surging Amazon and then Snapdeal. That Amazon India has been able to make significant inroads in just a few years shows that their ability to apply their learnings from other markets coupled with some India-specific strategies is starting to pay off.
Tier-1 vs. Tier-2 Cities
I live in a tier-2 cosmopolitan city with a relatively affluent population with healthy disposable income. In the past few weeks, I have ordered and received a bunch of packages from Amazon India. While signing for the package from the local courier service, I took the chance to look at the split of packages being delivered from other vendors. In this completely unscientific study, I noticed that Flipkart had the most packages to ship ranging from 45-60% with Amazon following close with 25-40%. Snapdeal had utmost of 10% with a few other smaller players accounting for the rest.
Tier-2 cities in India are really where the battle will play out. Tier-1 cities have caught up well with the concept of online shopping. But they have lousy traffic and commute times that incentivize the growth of online shopping. Tier-2 cities have manageable traffic and a good variety of shops within driving distance. To convince the shopper in one such Tier-2 city on the convenience of online shopping versus visiting a store in the local mall is a big deal and one that demonstrates strength in the concept. In that sense, the anecdotal data is worth a glance.
To say that Amazon, Flipkart and Snapdeal are spending money on print and television advertising would be a huge understatement. For weeks, they have swamped the local and national newspapers with full-color, full-page ads. Today, the 17th of October, Amazon.in has taken the first 4 pages of two major news publications – The Hindu and Times of India (and two pages on the Indian Express) for full-color, full-page ads for their “Great Indian Festival” promotion. Imagine Black Friday level marketing blitz- just for four days instead of one. And that is just print media.
Television ads for Amazon, Flipkart and Snapdeal run non-stop on all channels in addition to sponsored programs, reality shows, fashion shows, lucrative cricket games and blockbuster movie premieres. In short, this is a push for brand awareness unlike any other I have seen. Needless to say, it must be costing a pretty penny for all three and it can only last until the coffers are empty. In that sense, I expect Snapdeal to buckle first under the weight of contending with Amazon and Flipkart. As big as it is, I just don’t see Snapdeal staying independent in the long run.