Sachin Kapur, CMO, Crazeal India, speaks to Pitch on the potential of the local commerce space, which is driving the e-tailing business for the company. He further shares how trendy and region specific newsletters are proving to be essential marketing tools for the brand. He also speaks on the growing importance of mobile in this space and how COD is spoiling the Indian consumer. Excerptsâ€¦
What is the opportunity in the e-commerce space in India? What according to you is driving the growth of this segment?
India is the fastest growing online market across the world. If we look at the Comscore data, in the past one year India has grown 41 per cent in terms of internet usage, almost 124 million people are online. We are the third largest consumers of online data today, even in that the internet penetration is yet small, and hence there is ample potential waiting to be tapped. Opportunities are very large.
The biggest fact is that 75 per cent of that population is below 25 years of age, which presents a big opportunity: they are aspirational, well connected online and aware of global happenings. This population is what marketers are looking after. Three out of five people using the net are visiting online retail stores. As the penetration grows further, there is a huge market waiting to be explored.
What was your consumer insight before setting shop in India?
Before we entered India, which was in October last year, the market was already flooded with e-commerce players in the product space like books etc. We saw a huge opportunity from the local commerce perspective, like food, services, and restaurants. If you look at the buying pattern of an Indian consumer, you will find that he or she will buy a mobile phone once in a month or so, but that same individual would like to go out for meals more often two-three times in a month. We see that such deals and services have better merchants than products and brands with lower margins, they come with much better margins, purchases are high and overall the frequency of purchases is high.
From online marketing perspective, we are trying to introduce these services to individuals for the first time. For example, a lot of people didnâ€™t know that they could buy ski-diving adventure packages online or laser eye surgery online. We tied up with a reputed eye-surgeon in Bangalore and sold around 35 of those vouchers in two days, which cost Rs 25,000 each. Thus, these deals are first of their kinds.
What is your annual and monthly turnover? How many monthly and daily unique visitors do you get on your site?
As a policy, we cannot give out any region specific numbers. Globally we have more than 150 million subscriber base, present in 148 countries. In terms of Groupon Incâ€™s global turnover, the company registered a 45 per cent year-over-year growth in revenues to a total of $568.3 million, in the second quarter of 2012.
From a merchant perspective, a lot of Indian merchants will have access to these countries too, we give them this wide kind of reach, plus if these markets want to advertise particularly in the travel domain, we help them reach out to the Indian consumer through Crazeal. They can feature their deals on Crazeal.
In fact, we are among the top two deal sites in the country in a span of less than one year. In terms of growth in India, I can share that we see a 45 per cent of repeat purchase on the website; hence we have a loyal customer base too.
What is your marketing budget? What are the key marketing tools you use to communicate to consumers?
We are online business, everything is on social media in terms of advertising and engaging people, almost four-five per cent of the traffic comes to the site via social media. The conversion rate of this traffic is higher than the normal traffic that comes to the site directly. People are using social media platforms to share these deals and services with their friends etc, which is driving growth for us.
The other tool, apart from social media and online marketing, is through our newsletters. We have often heard people complaining of spam mails but what we ensure that our subscribers get that every day and with new deals and content. And these are location specific deals and also according to different geographies, weather like Monsoon deals etc that interest consumers, there is a lot of planning that goes on behind these newsletters.
We also indulge in experiential marketing activities, offline activations for movie promotions like Spiderman (in Delhi) and Batman (across 9 cities), and then we had CafÃ© Coffee Day (CCD) activations where one could get customised coffee deals. We also gave away coupons at PVR for members to get their free refreshments during movie screenings. In addition, we keep having online contests and we are equally active on consumer feedback.
In terms of marketing budgets, we partner with the best merchant outlets like PVR and CCD. In terms of investments we just buy a branding space in these merchant outlets and in turn they give us certain discounts etc. Unfortunately, we cannot share our budget in terms of numbers but we do spend a part of our quarterly budget on these experiential marketing activities. Some of these deals like the movie tickets are not offered for free but at a certain discount to customers, so revenue comes from these purchases. So all in all it is a win-win situation for us and the customer, where the latter gets a discount and we also get returns on our investments, it is a well thought out marketing strategy.
What is the ratio of your turnover and unique visitors in terms of metro and small town consumers?
50 per cent of our conversion and traffic comes from the top four metros. We are not too much into the product space but into the deals space, and local services are a big component of those deals, which are mostly available in big towns vis a vis smaller towns.
What are the challenges and opportunities you see in this segment?
This is a crowded space with many players in this domain. Our competitors are mostly focusing on numbers but less on quality, so once the consumer is dissatisfied, he will lose interest in those deals. But we are more focused on quality led experience from our deals.
What about opportunities?
Local commerce is the next big opportunity in this space. People in big metros are always willing to explore more entertainment opportunities during weekends so, we have started weekend.crazeal.com, which is a lineup of deals that one can do on a weekend.
There is no one in the market that is doing what we are doing, we are thinking from the experience point of view and not just discounts. We want to give customers special experiences that come at a great price.
What are the key trends in the buying patterns of consumers online?
More and more people are looking beyond purchasing just electronics, so the scope for brands and products across categories has immensely widened. Cash on Delivery is a new trend evolving, trial and buy (virtual trial) but this is spoiling the Indian consumer. Indian consumer is value driven and these kinds of trial and buy services will hurt businesses in the long term from bottom line perspective.
The other trend is that of free shipping, today, almost every site is offering free shipping. This strategy may be good to build a market for brands but again marketers have to be cautious as to not punching in the delivery charges in the product price, this may discourage consumers further.
What are the new strategies that websites are adopting to lure consumers and what will be the game changers in the industry?
The game changers are definitely going to be the delivery time line and customer experience. More than freebies, discounts and all the prime focus will be on what the consumer wants to experience. Let me ask this way; what if the deal goes bad? So, we, at Crazeal, give a complete reimbursement in case of customer dissatisfaction, even if the consumer has used the deal. We have a 14 day money return deal with our services.
Do you think this growth in e-commerce in India is sustainable or can it be another bubble that may burst soon?
The way E-commerce has come back; it is here to stay definitely. But having said that, there has definitely been consolidation and only the strong ones will survive in the long run. The next big wave and push for ecommerce will come from mobile. But there will be consolidation of that market too.