Since times the immemorial price has been a key, if not the only brand differentiator in this beautiful sub-continent of India. With the rise of e-commerce, this has become even more evident if it wasn’t already. A shift in shopping trends towards buying online at lesser prices is a trend that has picked up by the Indians. Cash burn rates of players like Snapdeal, Jabong, Paytm and Flipkart have floored prices for products to levels that were previously unheard of.
But when the competition is between Big players with deep pockets, Price and even the Product sold is no longer a differentiator. The product you see on Flipkart will be the same as the one available on Snapdeal and Amazon at approximately similar prices.
With heavy discounts leading to faster cash burns, e-commerce giants are shifting to “Plan B” which stresses focus on the customer experience in using their service. You may have noticed the multiple advertisements by Flipkart and Amazon, reassuring their customers of Guaranteed returns, Original products, Seamless service. It is an awakening of sorts where these giants take a step back and realize that they could fight this out in one of the two ways, either get in to a price war with cash burn rates that are unfeasible, or enhance customer experience and try to create a certain brand loyalty which has been lacking in this industry.
Morgan Stanley’s new valuation of Flipkart is an eye-opener for these players that their “Plan A” is not a sustainable form of operations and a shift to a more customer experience-oriented approach as opposed to a price-oriented approach is the need of the hour and key to sustainability and success.
This inevitability has led to a shifting trend in brand differentiators in the eCommerce platform from price to customer experience. In an industry that was originally meant to ease the life of its customers and allow them to shop from the comfort of their homes, the prodigal sons seem to be finding their way back to this very core principle.
A brand is quite simply defined as Trust. Trust is built based on the experience received. The experience received will result in a certain Brand Loyalty. And finally, this Brand Loyalty will inturn strengthen the brand. This is a simple cycle that needs to be at the forefront of your operational strategy!