Think about it: the days of social media sites being a strictly "social" experience are over, embedded commerce is now a large part of the experience, even on sites like Facebook. Many businesses have entered the world of social media for the sake of keeping up with trends — a smart move, but one lacking foresight. In this interview to Alokananda Chakraborty, Rajdeep Endow, who holds the dual responsibility as the managing director for India and the global delivery lead for SapientNitro, part of Sapient, is an integrated marketing and technology services firm, talks about what companies are doing right and why some are failing.
Notwithstanding the overall economic gloom, 2011 was a banner year for e-commerce in India. Would you agree? Or are we still stuck at the stage of couch commerce where consumers compare prices and features online and the go to physical shops to buy?
There is no dispute that 2011 saw unprecedented investor interest in the space. Around $400 million was invested by venture capitalists in Indian ecommerce firms last year. I think that is indicative of the general confidence in this space in India. E-commerce transaction volume has also gone up significantly, including the average transaction size.
While I am bullish on the Indian ecommerce story, I think the next couple of years will be fraught with challenges. The single biggest issue with Indian ecommerce ventures is that they are not yet profitable. Other than MakeMyTrip.com, we have not seen successful exits of investors in this space. We have a few systemic challenges that are contributing to this issue. First, customer acquisition cost is very high since awareness is still in its infancy. Second, fulfillment costs are prohibitive. E-commerce vendors have to set up their own fulfillment infrastructure if they want to control the customer experience. As the industry matures, these issues will get addressed as customers seek out e-commerce options and third party specialised fulfillment providers bring greater distribution efficiency and help reduce costs.
The other issue that Indian firms will get hit with is of product returns, that is, customers returning a product that they are not fully satisfied with. Globally, product returns can go up as high as 35-40 per cent for categories like women’s apparels and shoes. This puts pressure on e-commerce vendors to generate higher gross sales to generate the same net revenues. The product return rates in India are still in the single digits but firms will have to develop the capacity to absorb this cost.
So you are saying there is a lot of interest in this space but things are not as hunky dory as it appears from the outside. Can you think of any brands that are doing it right so those of us with interest could follow and learn from?
Globally, there are lots of great examples. I like how Nike has utilised the web to help build a strong global brand and establish itself as a market leader in sport and fitness. It has successfully blurred the line between online and in-store shopping. It has ingrained itself with its audiences by providing useful online tools for the amateur sportsperson. Its ‘bootcamp’ viral campaign showed football stars keeping in shape during the close season and encouraged amateur footballers to train over the summer. The Nike+ project is geared at users sharing training regimes, success stories and advice and tips online.
Another clear online winner is Amazon. It is among the most trusted brands online. This comes from its unyielding focus on consistently providing a superior experience to its customers. They have pioneered a lot of practices around personalisation, ratings and reviews and email marketing that have clearly differentiated it and made it a market leader.
I also like how US super retailer Target is integrating its stores, online mobile platforms and social media, providing customers the same experience irrespective of the medium they choose.
What do you think will be the top social media or technology trends through 2012? How can small businesses (SMEs) in particular use these trends to their advantage?
First of all, social media will get further integrated into our lives. We will accept social media as another way of having a social interaction, albeit in a transactional context. Companies will takeadvantage of this blurring of lines and integrate social media experiences into regular interactions with people. For example, as part of a marketing campaign, Domino’s Pizza posted unfiltered feedback on a large billboard in Times Square, bringing together real opinions from real people pulled from a digital source and displayed in the real world.
Second, television will go social. For many of us, watching television is already a social act, whether it’s talking to the person next to you, or texting, and calling friends about what you’re watching. But television is about to become a social experience in a bigger and broader sense. Television shows will allow voting via Twitter and other social media platforms, which encourages viewers to tap social networks while they watch.
We will also see an increased use of social check-in platforms and GPS. The increase in mobile penetration will bring further opportunities for social check-in platforms like Facebook Places, Gowalla and Foursquare. The potential for integration with a mobile device’s GPS system is enormous — from games to maps and check-in platforms.
For SMEs, my first suggestion will be to start creating their own content. Without content, a web presence is lifeless. So if you can make it a priority to create engaging content that is relevant to your customers — that is a great first step towards setting up your social presence. You’re creating content every time you publish a social media update, email newsletter, presentation and blog post.
Second, don’t get hung up on the tools. Focus on creating engagement with your customers, understand their needs, listen to them and respond, and your social media strategy will start creating itself.
Last, don’t try to control what people say about you in the social space. Whether you like it or not, they will say what they want to say. If you can be a participant in the conversation, be open and honest, and be real, you will get a lot out of social media.
What can marketers do to ensure they offer a better user experience?
Strategically, there are two big challenges for marketers. The first is the nebulous nature of the medium. While everyone understands that customers go online to discuss products and brands, seek advice, and offer guidance, it’s often tough to see where and how to influence these conversations. These are happening across multiple mediums and communities in real time. Second, there’s no one measure of financial impact of this medium, and many companies may find it difficult to justify devoting resources without understandings the exact outcome.
Has the rise of e-commerce affected the relationship between the brand and the end consumer in any way?
It’s not just the rise of e-commerce that has affected the relationship between brand and the consumer. Two other things have played a big role — one, the way social media has changed how we consider products, do research, seek inputs and make purchase decisions. And two, the proliferation of devices. Today, I can receive an ad on my mobile phone, do research on my tablet, order the product online on my home PC and collect it in a store. As a result of these changes, consumers want to engage with the brand, talk about it, “like” it (or not) and express their thoughts and feelings about it real time.
Second, the brand today is defined by the consumer’s experience with it. For example, if you want your brand to stand for integrity or ease-of-use, then every single customer interaction, across every single channel, has to provide that experience to the consumer. Inconsistent assortments, content, promotions, pricing, policies etc will mean you are either intentionally frustrating the customer or just becoming obsolete. This is a fundamental shift in the brand-consumer relationship.
We often hear about brands that have taken the social media by storm, but can you think of any instances of brands with major social media failures?
L’Oreal’s social media presence took a huge hit when it was revealed that they created a fake blog. Push marketing in the social media space is always a bad idea, especially when it’s this blatant.
Kenneth Cole used the uprising in Cairo to promote its spring collection on twitter (using the hashtag). People were appalled that Kenneth Cole would use such poor judgment and leverage a sensitive situation as a promotional tool.
More recently, during the Superbowl, Toyota planned a major Twitter campaign meant to promote the Camry. Creating a number of Twitter accounts, Toyota intended to engage users by directly tweeting them. However, this had the opposite effect: users accused Toyota of bombarding and spamming them with unsolicited messages. Though Toyota quickly suspended the accounts, this campaign still resonates as an example of a failed, large-scale endeavour.
The next big thing in e-commerce seems to be personalisation. Why should retailers invest in e-commerce personalisation? How does e-commerce personalisation enhance an online shopper’s experience?
Say you walk into a store, and are immediately greeted by a sales assistant. The assistant is very knowledgeable, understands the merchandise and inventory, knows which aisle any product is stored, and is able to pick up on your tastes and preferences and make the right recommendations. If you are a regular customer, the assistant will already be familiar with your tastes and may set specific merchandise aside and even pre-emptively call you to let you know about new arrivals.
How would you define your experience? This would delight most shoppers. Replicating this experience online is the attempt of e-commerce personalisation.
To understand what personalisation can do for you, one has only to look at Amazon, absolutely the No 1 in online personalisation. I have recently been trying to teach myself chess, and have bought some books through Amazon. Here is what it does to personalise my experience:
* When I land on its homepage, it figures out I am interested in chess based on my browsing history and makes several relevant product recommendations
* When I search for a book, it recommends other books based on what other customers bought/searched for
* It notices that I didn’t end up buying the book that I had placed in the shopping cart and sends me occasional reminders
* When new chess books are launched, it sends me a notification with quick links to brose/buy them.
I end up finding the right product faster, am more knowledgeable about it-and hence less likely to be disappointed post purchase-and sometimes find products that are absolutely the right for me, but one I wasn’t looking for. All of this increases conversions for Amazon, makes the experience enjoyable for me — and thus increases the likelihood of my returning — and creates a relationship based on trust that many other retailers will find very hard to break into.
You are saying personalisation can be used to help drive loyalty, right? If so, how should brands using e-mail as a marketing tool go about this?
Well, email marketing without personalisation is just spam. If you want to use email marketing, you better personalise. The key objective here needs to be to increase relevance to its recipients. The biggest misconception about personalisation is that it’s simply about inserting person’s first name in the subject line or within the body of an email. While that is certainly a useful practice, relevance can include recommendations based on past purchases and browsing habits, or even date-triggered messages.
Among the favoured tools here is dynamic content. This basically means that large elements of the email content (including how it looks) are determined dynamically based on complex rules. With dynamically generated content, an email message is created just once, but it may render in dozens of different ways depending on the rules you have specified. Let’s say a pizza chain with 10 different locations in a city wants to send out emails to its customers with special offers. It would make sense for the chain to direct the recipients to the location that is nearest to them by highlighting the address. Instead of sending 10 different creative messages, this can be easily accomplished using dynamic content rules and simply sending one email. The email content will be generated in real time based on specific conditions that get fulfilled.
You can also design campaigns that are triggered by specific events or dates. For example, your customer could receive a special offer for a vacation before their anniversary. You could further personalise this if you know the person’s interests (food, arts, culture, sports etc).
Mobile commerce has arrived in a big way globally, and many online merchants are already mobile-ready. What’s the situation in India?
A recent survey by eBay highlighted that over 94 per cent of Indian smart phone users access the internet on their mobile. Shopping is the third most popular category of search after emails and social networking, with 70 per cent of smart phone users accessing online shopping websites.
Visa, for instance, has teamed up with Monitise to let financial institutions in India offer mobile payments such as ticket purchases to its customers. While this is very encouraging, we have some distance to go before mobile commerce can reach critical mass. I believe that the mobile is here to stay as a medium to get information about products, do search and compare reviews. However, mass-market adoption of payment via the mobile is at least a couple of years away.
Where I think we will see traction is in money transfer through the mobile and coupons. As more and more firms in India embrace digital marketing, I think customers will see an increasing trend of geo-targeted coupons from nearby merchants on mobile devices.
What will be the game changer in the mobile commerce space?
I think by far the single biggest game changer in mobile commerce will come about with the adoption of contactless payments. This is bound to happen considering there are almost twice as many mobile users on the planet as there are unique bank account holders, so this will dramatically increase access as well as address issues like social inclusion. Specifically, technology like NFC (near field communication) will allow you to completely replace your physical wallet with your mobile wallet. You can load funds directly on your phone and “swipe” the phone at NFC enabled terminals to make payments in stores. There are a whole host of issues around technology, governance, security that need to be addressed, but there is no doubt that once this comes about, it will fundamentally change how we think about payments, credit cards and cash. This will blur industry boundaries as mobile phone operators will find themselves “competing” with banks and credit card companies.