The Hindu Business Line : Brand value

Log on to a few online shopping sites and skim through the contents. You'll find the virtual space choc-a-bloc with almost all products under the sun, some faceless and some lesser-known fish in the fry and, yes, the big guns too, jostling for room and screaming for attention. A host of top brands — Lee, Wrangler, Timex, Titan, Philips, VIP, Gili, Archies, Nestle, Whirlpool, Funskool — have set shop in what is perhaps the only medium that offers them direct access to consumers at large.

A peek into the shopping cart of the upwardly mobile Net-savvy consumer reveals that when it comes to white goods, electronic items and mobile phones, the buyer prefers established brands. As the value of the item goes up, so does brand consciousness, says K. Sundararaman, Head, Sales and Alliances, Sify.com.

For "low-involvement" or inexpensive products, such as headphones, T-shirts or tool kits, the brand does not matter to the Internet consumers; but they are "extremely brand conscious for high-involvement items," says Ashish Kashyap, General Manager and Business Head, e-commerce, Indiatimes.com.

It's the brand that counts

Says Karthik Ranganathan, a compulsive online shopper, "If I buy something like a laptop bag, then non-branded would do just fine. But I'm keen on brands for long-term deals where I'd be spending a substantial amount... something like a TV or computer."

Industry players say that although consumers are attracted by offers and combo deals, these only aid them in choosing the brand. Discounts are not the only draw; durability and brand equity score high too. Typically, branded items sell more than the non-branded ones due to the trust factor, says Kashyap.

M.A. Dushyant, who looks for brands when he buys electronics and jewellery, recently bought a PDA at nearly 20 per cent discount. "Though no warranty was provided, I knew Casio was a good brand, so I bought it." But most electronics majors provide warranty valid all over India and are backed by a large after-sales service network across the country. Subhash Rawat, Deputy Manager, e-commerce, Philips India, which has 20 branches and 300 authorised service centres across India, says a brand has its own strength, product quality and history, and assures prompt service, which non-branded items do not offer.

Philips sells its products on Sifymall, Rediff and Indiatimes. DVD players and DVD/VCD music systems are the fastest moving items contributing to 45 per cent of online sales. The company's online sales account for about 2 per cent of overall sales.

Apart from consumer durables, online shoppers also prefer to buy `standard brands' (labels they regularly use) from the Net. "The shopper knows what he will get because he has used it earlier, negating the touch-and-feel issue. For example, if a customer uses only Arrow shirts and wants to add white or blue shirts to his wardrobe, he can easily order online," says K. Vaitheeswaran, Chief Operating Officer, Fabmall.com.

Big brands and shopping sites share a symbiotic relationship. As brands get greater mileage online, the sites too cash in on the brand consciousness of the Net shopper.

The undisputed rulers

It is not only raining brands online, they are reigning too, going by the sales figures of the shopping sites. On most of these sites, consumer durables and electronic gizmos rule supreme.

Fabmall has a customer base of over five lakh and nearly 70 per cent of them shop for branded items. The top-5 brands on this site are LG, Swatch, Titan, Tanishq and Nokia and these account for almost 50 per cent of branded sales.

At Sifymall too, branded items contribute to around 50 per cent of total sales by value, with Nokia, Samsung and Sony Ericsson mobile phones topping the popularity charts.

Branded products and services contribute to 85 per cent of sales of Indiatimes. White goods makers such as LG, Philips, Onida and Whirlpool are the top performers, after the travel industry, where Air Sahara is a prominent player.

Advantages galore

On the flip side, brands too have a lot to gain from an online presence. Unlike real-time retailing where manufacturers sell products through local dealers, virtual shopping allows brands to deal directly with customers (although a few dealers also sell brands online).

"The biggest benefit is that branded products are accessing their customers through a growing channel and the manufacturers do not need to spend on opening showrooms or having warehouses at multiple cities across India. One central warehouse is enough," says Vaitheeswaran.

Says Kunal Arora, Assistant Manager, lgezbuy.com, "The first step to CRM (customer relationship management) starts here when the customer has bought your product and knows that someone is there in the company to help him out."

LG sells its complete range of home appliances and IT products on its site lgezbuy.com and also on Sifymall, Indiatimes, Fabmall, Rediff and Mahamaza. It gets about 1,500 orders online every month, with microwave ovens doing "exceptionally well".

Online buyers too prefer dealing directly with manufacturers and not through intermediaries. K. Srinivasamurthy, who has bought high-end products such as an Apple iPod and a Nokia mobile phone on the Internet, says he prefers shopping online for branded items since the entire range is displayed, while a dealer may just "hem and haw" and not provide accurate details.

R. Dinakar, a regular online shopper for six years, says it is safer to deal with manufacturers directly, unlike a store dealer who may cheat him with faulty parts, especially in the case of gadgets. Also, local dealers may not always have stock of unique models seen online.

The Internet is an ideal platform for brands to experiment with sales strategy. "The audience online is predominantly from SEC A, and brands would like to be in touch with them. The long-term benefits for the brand are huge due to their presence online. They get their audience to interact with the brand, experiment with new products online before launching them offline in a big way, offload their off-season stock and oddments at good realisations and build a new channel for sales," says Sundararaman of Sify.

Deals for the buyer

While Indiatimes, as a policy, sells branded stuff at prices lower than store prices, with most other sites it is more a sales strategy.

"Prices at Fabmall are the same as store prices, although in our start-up phase, we offered brands at a discount to move customers to the online medium. But now we have a loyal customer base," says Vaitheeswaran.

"The cost of Philips products online is equal to the market operating prices. But sometimes, as a strategic decision to support the channel and push sales, we offer value propositions to online customers. From time to time, we offer attractive prices for cross promotional sales, liquidation of excess stock or phasing out models to replace with newer ones," says Rawat.

Better visibility for brands

Another edge brands have online is round-the-year visibility, with most shopping sites featuring top brands prominently through various channels.

At Fabmall, brands offering great consumer deals for particular periods get showcased on the homepage; some brands pay monthly fees to be always present on the homepage — similar to brands buying shelf-space in stores so that customers who walk in "notice them upfront."

"Also, we pick a brand where there is great merchandise and offers every month and promote it as the `brand of the month'. This helps brands to keep changing their wares in line with their strategy," says Vaitheeswaran.

Indiatimes adopts multiple marketing strategies to provide "opportunities for trigger" through contests, cross-bundling and festival promotions.

Brands also bank on existing customers to increase their prominence online. Says Arora of lgezbuy, which has a customer base of more than a lakh, "There are two types of shoppers. One is the middle-management employee who spends half his day in office and wants to give the best to his family. He does not have time but has faith in the brand and will buy without much research. The other kind has time on his hand, handles his own business, does research on Web sites and retailers, and bargains his way to the best deal. He is an excellent tool for word-of-mouth publicity and will share his experience with others."

Rawat says e-commerce players could think of providing "referral sales commission to customers" to tap the potential of the existing clientele.

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