Online brands see higher growth on own channels, apps over Flipkart, Amazon

BENGALURU: Brands that sell directly to consumers are seeing higher growth in sales via their own websites and apps, compared to when they sell through leading e-commerce marketplaces such as Flipkart and Amazon, according to third party data shared with ET.’

The shift in consumer buying patterns, across large trusted brands, comes at a time when marketing spends touched an all-time low in the second quarter of the year, nudging businesses to invest more resources in their own platforms.

For relatively newer brands and internet sellers, however, e-commerce sites such as Amazon, Flipkart, Nykaa and BigBasket continue to be the preferred route for growth.

The overall e-commerce industry, dominated by Flipkart and Amazon, saw sales grow 31% during the calendar year third quarter ended September 30. However, direct-to-consumer brands reported a 78% growth in sales through their own websites, according to a new report by e-commerce Software as a Service platform Unicommerce.

Even so, all brands continued to eye Amazon and Flipkart to acquire new-to-online consumers, especially from outside the large metros.

The surge in shoppers going directly to brand websites indicates that consumers are not content with shopping online from a single source, experts said, and is pushing more brands to build their own D2C channels.’

According to the report, there has been a 51% surge in the number of brands building their own websites in the third quarter.

“Marketplaces offer brilliant consistency and price discovery for a shopper, but a few propositions require a personalized approach,” said Revant Bhate, CEO of Mosaic Wellness, which runs Man Matters, a D2C digital health clinic for men.

“Health & Wellness, for example, needs an understanding of nuanced consumer needs, doing a doctor consultation and personalized product recommendations which may not be conducive to the standard e-commerce experience,” Bhate added.

Industry watchers and company executives told ET that marketplaces, given their size, reach and muscle, are typically the first destinations for new-to-online shoppers. However, as these consumers progress in their digital journeys and discover brands that they like, they tend to start shopping directly.

“Direct channels help in better content marketing, upselling, as well as a more profitable channel long term,” said the founder of a top personal care brand. “To be clear, getting sustained visibility on marketplaces is an equally expensive proposition,” he added.

E-commerce logistics provider Shiprocket said it had seen D2C brands shipping 33% more orders in September compared to July.

“The growth was strongest for the large brands in September on the back of sales and promotions. Initial indications for October are showing that this will be a strong month even for the smaller D2C brands,” said Saahil Goel, cofounder and CEO of Shiprocket.

Overall industry growth is robust, but there is still some way to go for consumer spending to normalise.’

According to Unicommerce, while e-commerce order volumes grew by 31% in the third quarter, the gross merchandise value (GMV), or gross sales, for the sector grew by just 24%. This was due to a 5% drop in average order values.

This is because consumers opted for more value-conscious buying and also due to a change in the category of products people were shopping for online, with personal care, healthcare and pharma making up a bigger chunk of online spending, which tend to have lower ticket sizes.

“The pandemic has changed the dynamics of the retail ecosystem substantially. Ecommerce is no longer the supporting vertical and has now taken a front seat. With the increasing focus of companies on investing in online channels and rising interest in adopting technology solutions to improve business operations, we firmly believe this growth momentum will continue for the next few quarters,” said Kapil Makhija, CEO of Unicommerce.

Online brands see higher growth on own channels, apps over Flipkart, Amazon Online brands see higher growth on own channels, apps over Flipkart, Amazon Reviewed by TechCO on 10/18/2020 Rating: 5

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