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Indian e-commerce players’ gross merchandise value may have touched a billion dollars during the festival sales, but their overall spends for advertisements and promotions have come down dramatically.
Research and consulting firms tracking the e-commerce space said their overall marketing spends have dropped from ₹2,000 crore last year to ₹500 crore this year as they strive to achieve operational efficiencies.
A report from advertising agency Madison said the e-commerce segment started to show signs of a slowdown from the beginning of this year. The sector has spent about ₹390 crore in the first half of 2016, down 37 per cent from ₹629 crore during the same period last year. Most of the companies have reduced their big bang TV spends and are focusing on less expensive digital platforms, Madison says.
For the past two years, e-commerce players have been burning cash to grow the market and acquire more customers by doling out hefty discounts.
Sam Balsara, Chairman, Madison World, told BusinessLine that though the overall marketing spends of e-commerce sector have shown a sharp decline since the beginning of the year, the advertising budgets looks reduced because there has been a consolidation in the sector. Last year many smaller players like Craftsvilla, Limeroad, Voonik, Jabong, Paytm, and BigBasket were spending on promotional activity. Many of them have scaled down.
A media buyer, who wished not to be quoted, said, “Many smaller players do not advertise at all and instead piggy-back on the bigger players, who have already created enough buzz over the last couple of years.” Snapdeal said it would be spending about ₹200 crore during this festival season. Amazon and Flipkart-Myntra have not disclosed their marketing budgets. However, sources said that they would not have spent more than ₹150 crore each. Amazon and Flipkart declined to comment.
The advertising spend for October for e-tailing as a whole was, however, more than three times the usual monthly spends, according to RedSeer Consulting.
The Bengaluru-based advisory firm said the e-tailers might have surpassed the sales expectations during the festival sale period at ₹7,000 crore, which is also expected to drive the cumulative annual sales to ₹13000 crore this fiscal.
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