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Submitted By
Atul Jain
of
International Business
Batch 2013-16
This is an original piece of my work and is neither copied (partially/fully) from any
other scholastic work nor is it submitted to any other institution for any other degree
or diploma. I remain fully responsible for any error and plagiarism.
Date:
Guide Certification
This is to inform you that Atul Jain, student of MBA (IB), Year 2013-16 has
completed research project on the topic Impact of Digital Marketing on E-Commerce
under my guidance. I am pleased to forward the same to be considered as final
submission and the viva.
Date:
3
Table of Contents
INTRODUCTION ................................................................................................................................ 4
OBJECTIVES ......................................................................................................................................... 5
RESEARCH METHODOLOGY ..................................................................................................... 6
E-COMMERCE IN INDIA ............................................................................................................... 7
USAGE OF E-COMMERCE IN INDIA ................................................................................... 10
TYPES OF E-COMMERCE BUSINESS MODELS IN INDIA ....................................... 13
DIGITAL MARKETING STRATEGIES IN E-COMMERCE ........................................ 22
RESEARCH FINDINGS ................................................................................................................. 25
FUTURE OF DIGITAL MARKETING IN INDIA ............................................................... 31
CONCLUSION ................................................................................................................................... 32
BIBLIOGRAPHY .............................................................................................................................. 33
4
INTRODUCTION
Digital marketing is a term for the targeted, measurable, and interactive marketing of
products or services using digital technologies to reach and convert leads into
customers and retain them. The key objective is to promote brands, build preference
and increase sales through various digital marketing.
It is the practice of promoting products and services using digital distribution channels
to reach consumers in a timely, relevant, personal and cost-effective manner. While
digital marketing is a part of mainstream marketing activity in the more developed
markets, but in India it is still in a nascent stage.
In this rapidly changing global scenario, Digital Marketing has revolutionized the
world as never before.
The field of digital marketing includes a whole host of elements such as Email
Marketing, SMS Marketing, Social Media Marketing, Search Engine Marketing,
Search Engine Optimization, Paid Banners Ads, etc. Previously seen as a stand-alone
service in its own right, it is frequently being seen as a domain that can and does
cover most, if not all, of the more traditional marketing areas such as Direct
Marketing by providing the same method of communicating with an audience but in a
digital fashion. Like traditional marketing, Digital Marketing also has 2 forms, each
of which has their pros and cons.
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OBJECTIVES
RESEARCH METHODOLOGY
E-COMMERCE IN INDIA
Over the last two decades, rising internet and mobile phone penetration has changed
the way we communicate and do business. The e-commerce penetration in India may
be comparatively lower than the US and other European markets, but it continues to
grow at a rapid rate with many new entrants. Though e-commerce is relatively a new
concept in a developing country like India, it is heavily leaning on the internet and
mobile phone revolution to fundamentally alter the way businesses reach their
customers.
As per a study conducted by IAMA, online travel dominates the e-commerce industry
with 70% of the total market share, followed by e-retail.
In 2009, the e-commerce market in this country was worth around US$2.5 billion, in
2011 it was US$6.3 billion and in 2012, $14 billion. This number is expected to reach
$15 billion in 2016, up from $35 million in 2014, according to a new report by
Google and Forrester Research.
8
In e-retail, electronics segments currently leads the segment in terms of online sales
followed by Apparels and accessories. Other segments like Home and furnishing and
baby products, though currently account for smaller proportion of the online sales, but
are rapidly growing in the e-retail space.
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E-Commerce has emerged as a trade medium in the era of globalization, which offers
a convenient way of transacting over the internet without any restriction of
boundaries. With the advent of e-commerce, retailers have the ability to reach the
customer’s home.
The physical delivery of goods has now been converted into electronic delivery and
one can experience the entire range of products on offer on the website itself. With
options of paying online through debit and credit cards, even the transactions
have become purely electronic. The focus of online promotions revolves around the
great discounts, deals, coupons, convenience, etc. offered by the e-commerce
websites.
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In India, internet usage is still driven by email and information search. However, the
interesting part is that out of the 13.2 million internet users across 26 cities covered in
I-Cube 2006, (Syndicated Research of e technology group @IMRB International),
14.2% use the internet to buy travel tickets; 5.5% people do online shopping
especially products like Books, Flowers, Gifts etc. and 5% people deal in stocks and
shares through the internet. It is worthwhile to note that the number of Internet users
using E-Commerce is growing rapidly year after year. Thus, E-Commerce is surely
being adopted by the Internet users in a major way to shop. They are buying a variety
of products online and visiting various websites to buy products from.
The below chart shows the number of internet users and their key activities in India :
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In addition to the industry size, it is important to understand the reasons behind the
growth and barriers of E-Commerce industry in the country. This section elaborates
the triggers that impact the adoption of E-Commerce by the Internet users.
As evident from the table above, time saving is the major reason that drives Internet
users to shop online. It is followed by convenience of shopping anyplace at anytime.
Since the e-commerce websites do not have space constraints, thus companies can
display whole range of products being offered by them. This further enables the
buyers to choose from a variety of models being offered and allows the users to
compare the various features of all the products before taking a final decision. To
attract customers to shop online, e-Marketers are offering great deals and discounts to
their customers.
Apart from the favorable triggers, there are also a few roadblocks for the growth of e-
commerce in India. Absence of touch-feel-try creates concerns over the quality of the
product on offer. Another roadblock in the way of E-Commerce is lack of
interactivity, ie, the buyers and sellers cannot negotiate with each other. Moreover,
consumers do not feel safe in using online payment modes, which is also a cause of
worry for online marketers. Increasing rate of cyber crimes has made customers
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apprehensive of revealing their credit card details and bank details online. Moreover,
the duration of selecting, buying and paying for an online product may not take more
than 15 minutes; however, delivery of the product to customer’s doorstep may take
about 1-15 days. Thus, E-Commerce has to bank on the convenience and discount
platform as there is no way that they can compete with the offline platforms on the
experience that they provide. There is no doubt that Internet shopping has a number of
benefits to offer. With fast changing lifestyles of people in India, E-Commerce is
surely the most appealing and convenient means of shopping with convenience. Thus,
addressing these issues have become critical for e-commerce companies to expand
beyond the current user base.
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The meteoric growth of Internet based E-commerce at the turn of the last century is
truly baffling. During the last one decade, this market space has grown in several
directions. In its first generation, it saw the emergence of portals and search engines.
However, in due course more and more organizations began to cater to the Business
to Customer (B2C) market as well as started creating special platforms to enable
Consumer to Consumer (C2C) transactions.
As several organizations began to operate in the Internet market space, they innovated
unique propositions to create value in the process. These were either not found or
difficult to replicate in the traditional brick and mortar operation.
There are various kinds of B2C and C2C e-Commerce business models that have
flourished in India over time and each business has its own set of characteristics.
Apart from just categorizing the business models as B2B and B2C, one can also
categorize them on the basis of their business objectives and their unique selling
proposition to their customers.
In this section, I will mention about the various business models categorized as per
their business objectives and their USP to their customers.
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DEALS WEBSITES
There are many e-Commerce websites committed at providing the best deals to the
consumers and strive to lure the customers by offering various incentives like price
discounts, freebies, etc. These Deals e-Commerce sites normally operate at relatively
thin margins and their primary objective is to win a customer and are thus battling in
the over-crowded e-Commerce space using discount as their main USP to offer to
their customers.
A Flash Sales e-Commerce Website is a B2C type business model where the website
sells the products directly to the end customers. They normally manage the entire
process of the e-Commerce lifecycle on their own or through their partners and the
consumer makes the payment directly to the business owning and managing the
website.
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A flash sales website typically offer products at a huge discount to its customers.
They generally buy old stock from the brands / manufacturers or their distributors and
liquidate the same through their website. Many brands do partner with them to
liquidate their dead stock and thus it is often termed as a liquidation business model.
The consumers take the benefit of these huge discounts, which at times ranges from
50% to 90%, and prefer to buy the products they always aspired to own. They are
normally unaware or do not really care even if the product they are buying from such
websites are obsolete or no longer in fashion.
A Daily Deals Website also operates as a B2C website and typically showcases a very
lucrative sale on a single or a set of products for the customers. Unlike the Flash Sales
website, such a deal is time bound (usually for a day) which compels the user to make
immediate decisions for that product purchase.
Such sites normally negotiate and get a great bargain from the manufacturers or their
distributors against a minimum volume commitment. In case they are not able to sell
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the entire lot of the discounted product on the day of sale, they tend to offer the same
product on sale again after a few days. Thus, they keep on shuffling their daily
merchandise on sale and try to maximize the sale on that day itself.
A group buying website is quite a unique B2C business model where the website
invites the buyers to buy the products / services at a discounted or at a wholesale
price. Like the Daily Deals site, the products advertised on the group buying sites are
also time bound, but usually not limited to a day.
In this concept, the website honors the transaction only if the minimum number of
buyers (as fixed by the website) buy a particular product, else they refund the
customer’s money.
In this case, the customer is constantly made aware that he will get the advertised
product only if a minimum number of people buy this product and this in a way,
makes the buyer refer his friends to buy the same product at the earliest.
The best example for this kind of a website would be Nearbuy.com formerly known
as Groupon.
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ONLINE SUBSCRIPTIONS
The customers can avail the services by paying for the service online and can continue
to keep availing the services regularly by making the recurring payments through such
websites itself.
A good example for the same would be IndiaMags.com which offers magazine
subscriptions online.
There are a number of B2C e-Commerce websites offering a range of products and
services to customers across different brands and categories. Such websites buy the
products from the brands or their distributors and sell to the end customer on market
competitive prices. Though their modus operandi is same like a flash sales website,
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but their business objective is to offer the latest products to the end customers online
at the best possible prices.
MARKETPLACE
Another business model gaining attracting in India recently is the online marketplace
model which enables the buyers get in touch with the sellers and make a transaction.
In this business model, the website owners do not buy the product from the sellers but
act as mediators to facilitate the entire e-commerce transaction. They do assist the
sellers in various services like payment collection, logistics, etc. but do not prefer to
hold inventory in their own warehouse.
It is interesting to note that more and more of the Deals websites and e-Retailers are
now moving into the marketplace model because of various advantages that this
model has over their respective current business models.
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1. C2C Marketplace
2. B2C Marketplace
The process is more or less the same like that of a C2C Marketplace with the
exception that it does not allow individual users to sell their products online.
Another significant difference in this model is that unlike a C2C marketplace where
anyone can become a seller, this is a more managed platform and allows only selected
sellers to sell their products. Though there can be multiple sellers for the same
product, but the site only permits legitimate sellers to sell through their website.
They prefer to work on a drop shipment model where the website’s logistics partner
picks the product from the seller and delivers it to the buyer. This gives them an
advantage of not blocking their inventory and reduces their warehousing costs.
Best example of this kind of a website would be SnapDeal.com which has now
become a B2C Marketplace.
This is the latest business model of its kind recently started in India. In this business
model, the various brands setup their own exclusive brand stores online to enable
consumers buy directly from the brand.
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The website showcases the entire catalogue range of the brand and reflects the look
and feel that of the brand itself. It also offers the same promise and policies to the
customer, which the brand offers through their physical retail outlets.
These websites generally prefer to sell the products at MRP and because the
customers are sure that they are buying genuine products directly from the brand, they
do not mind buying the products at MRP.
Though the website represents that it is the brand selling to the end customer directly,
but many a times the entire operations of the store is managed by another licensed
operator who manages the entire operations and billing to the end customer. This is
also done to keep in line with the FDI laws in India where multi-national companies
are not allowed to sell directly to the end customers.
Though the number of brands operating through an Exclusive Brand Store online are
very limited in the country as of now, but this segment is fast growing and brands
increasingly are moving towards this concept.
A few examples of brands operating through an Exclusive Online Brand Store are
Lenovo, Canon, Timex, Sennheiser, HP, Samsung, etc.
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The digital marketing avenues provides marketers with the unique opportunities to
reach out to consumers in numerous ways. When exploited well, it results in
significant increases in revenue and profitability, specially when we use the same in e-
commerce websites. Simply launching a web site and hoping the search engines will
pick it up or that someone will stumble upon it isn't a very effective strategy. A good
Digital Marketing strategy involves the use of multiple marketing strategies in parallel
to reach out to customers through various channels.
PULL
In Pull Digital Marketing, consumers will actively seek out a brand for its products or
services because they are already aware of its reputation. In terms of marketing,
through intensive advertising, the aim is to establish a brand that becomes inherently
linked with customer satisfaction, as products provide value for the end user.
Therefore, what’s required from a digital marketing perspective is that consumers will
be influenced by effective Search Engine Optimisation, Pay Per Click strategies,
blogs, content marketing and Social Media campaigns and so come to the company of
their own volition. Overall, pull marketing relies on the generation of brand loyalty
and therefore growing rates of repeat custom.
PROS:
No restrictions in terms of type of content or size as the user determine what they
want.
CONS:
⇒ Considerable marketing effort required for users to find the message/content.
⇒ Limited tracking capabilities – only total downloads, page views, etc.
PUSH
PROS:
CONS:
⇒ Compliance issue – each push messaging technology has its own set of
regulations.
⇒ Requires mechanism to deliver content – the marketer has to use an application to
send the message, from an email marketing system to RSS feeders.
⇒ Delivery can be blocked – if the marketer does not follow the regulations set forth
by each push message type, the content can be refused or rejected before getting
to the intended recipient.
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While digital marketing is effective when using one message type, it is much more
successful when a marketer combines multiple channels in the message campaigns.
For example, if a company is trying to promote a new product release, they could
send out an email message or text campaign individually. This, if properly executed,
could yield positive results. However, this same campaign could be exponentially
improved if multiple message types are implemented. An email could be sent to a list
of potential customers with a special offer for those that also include their cell phone
number. A couple of days later, a follow up campaign would be sent via text message
(SMS) with the special offer. Push and pull message technologies can also be used in
conjunction with each other. For example, an email campaign can include a banner ad
or link to a content download. This enables a marketer to have the best of both worlds
in terms of their marketing messaging. Overall, most companies benefit the most from
a balanced use of both strategies.
RESEARCH FINDINGS
As part of this project, we did a primary research for an e-commerce company who
relies heavily on various Digital Marketing strategies to drive its monthly revenue.
The research was conducted using primary data from web analytics of a Premium
Online Fashion Store operating in India and targeting the youth in Tier 1 and Tier 2
Cities. The company has positioned themselves as an aspirational brand among the
youth and offer an extensive variety of products like Topwear, Bottomwear, Footwear
and Accessories suited for both men and women audience. Being a premium online
store, they are using a good mix of digital marketing channels to spread awareness
and drive there daily sales. The major digital marketing channels the company uses
for its daily operations along with their spends and Return on Investments are detailed
below :
The company uses Facebook as one of the mainline advertising platform to spread the
word across their daily offers and have been creating paid campaigns on a daily basis.
The campaigns are a combination of various kind of advertisements possible on
Facebook like Post Boosts Right Hand Ads, Multiple Product Ads, Carousel Ads,
Custom Audience, Look Like Audience Targeting, Remarketing Ads, etc.
The overall campaign spends and returns over a 4 weeks period were as follows :
The company, though not very aggressive on Instagram yet, has been doing some bit
of marketing spends on Instagram as well.
The overall campaign spends and returns over a 4 weeks period were as follows :
Without doubt, Google is the most important platform for any marketer to be visible
to target users searching for specific products. Google demands a premium price
when it comes to Advertising spends since the affinity to buy for the users searching
on Google is much higher as compared to any other platform, since the need is pre-
established.
The company has been investing a lot of money and efforts in optimizing the website
to increase its visibility on Google search results when users search for relevant
keywords. The efforts were put in to increase the website rank on organic as well as
on paid Google Listing.
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The company used various types of Advertising opportunities on Google for the paid
campaigns as explained below :
They were spending money on Pay per Click Advertising (PPC) on Google Search
and optimizing the Ads and spends so that our text ad gets displayed on Google
Search results, whenever a user searched for a relevant product on Google.
They were also creating image ads and spreading the same across multiple websites
using the Google Display Network (GDN) to maximize our visibility across multiple
genres of websites, where our target audience would be present.
They also experimented with the Google Product Listing Ads (PLC) such that our
product gets displayed along with the price and Buy Now Link in the Google Search
Results, the moment a user searches for a relevant product or product category.
However, this type of Ads turned out to be very costly and were not ROI driven, thus
we did not continue these Ads for a longer duration.
4. Google Remarketing
The company was spending a lot on Google Remarketing where in our Image Ad
follows the user once he exists our website and goes to any other Google Partner
Website. This not only helps in brand recall, but also keeps the user informed about
the product or category he showed interest in and eventually persuades him to make a
purchase.
The overall campaign spends and returns over a 4 weeks period were as follows :
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Email Marketing
Email marketing is known to be one of the most cost effective and ROI driven
marketing channel for all e-commerce companies. We heavily rely on Email
Marketing campaigns for our daily sales and keep innovating with the communication
to increase the conversion rate.
Email marketing is best when used effectively. We segment the users based on
multiple parameters like Geography, Gender, Purchase Behavior, etc. and then send
them personalized communication to make it more relevant to them.
The overall campaign spends and returns over a 4 weeks period were as follows :
SMS Marketing
Though it is considered not a very ROI driven marketing channel for e-commerce
players, but it goes a long way in brand recall and plays an important role in
increasing the repeat purchase rate of the customers.
The overall campaign spends and returns over a 4 weeks period were as follows :
Affiliate Marketing
Affiliate Marketing has proven to be the most effective and ROI driven marketing
program in the entire Performance Marketing Plan for our online store and accounts
for nearly 35% of the overall Revenue every month.
The company has been working with multiple affiliate partners as well as Affiliate
Networks on multiple marketing campaigns like Cost per Visit (CPV), Cost per Lead
(CPL) as well as Cost per Sales (CPS) campaigns.
The overall campaign spends and returns over a 4 weeks period were as follows :
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Thus, if we calculate the cumulative data for all the channels above, then a
comparison of the effectiveness in terms of ROI of every channel can be depicted in
the following chart :
200% 169%
149%
150% 112% 101%
100%
40%
50% 23%
0%
Af/iliate Facebook Google Instagram Email SMS
Marketing Marketing Marketing
Thus, looking at the above data, it is clear that Email Marketing remains to be one of
the most cost effective and ROI driven Digital Marketing channel for e-commerce
companies as on date.
However, since every channel has its own limitations, we need to deploy an integrated
channel marketing approach to drive the growth of e-commerce business in India.
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Digital Marketing will continue to remain the most powerful and measurable way of
Marketing in the future. Some of the key observations on the changing trends of
digital marketing are as follows :
⇒ Content will continue to be the most important aspect of Digital Marketing. Marketers
will move on from creating generic content to personalized content and hence
Personalized Content Marketing will hold the key in future.
⇒ General techniques like SEO, SEM and Social Media will continue to exist. However,
the key will be to target specific set of audience and influencers will be the need of
future.
⇒ Automation in marketing will emerge more effectively and will be predominant in
future.
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CONCLUSION
There is no single channel that can be used in isolation for any e-commerce company
and multiple channels needs to be deployed to have a comprehensive integrated
marketing approach.
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BIBLIOGRAPHY