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Not even a decade since it blossomed and Indian Ecommerce is dying

TFI Desk by TFI Desk
28 July 2016
in Economy
Ecommerce Marketing Sales
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Indian E-commerce is failing and it is a result of ‘Marketing Myopia’? As the name suggests it refers to a phenomenon where marketing is short sighted in nature. The discussion ahead can be divided into several parts –

1) Why is skewed marketing a spoil sport if the underlying business is perfect.

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2) How short – sightedness can affect profits in the long run.

3) How profit making in the short run is detrimental to survival (which ensures profit making in the long run).

4) How all of these are relatable to the startup fiasco we saw unfold in recent past. We will take these cases one by one.

The term came into prominence after being first mentioned in 1960 in HBR by Theodore Levitt. It postulated that a business with short sighted vision was bound to fail. The short sightedness that he refers to here encompasses various mistakes that companies do. The biggest mistake an emerging player does, is to focus on sales and revenues, and not think about customer needs. Here is a paradox which has to be first explained and then mended to reach the conclusion with definiteness.

Taking cues from many industries and businesses, it was researched and concluded that marketing plays a huge role in growth of an organization. Though the term ‘growth’ itself may be inappropriately used in many expanding firms, here it signifies long term growth.

Coming to the first part of discussion, when we assume the underlying business is perfect we miss a couple of crucial points. Even if a firm sees rapid and/or sustained growth in the initial years, we are wrong to assume the business is in growth stage. Having seen examples like Nokia with more than a half of market share at one time completely vanishing from the market in a span of few years; it would be utter naïve of us to call a company ‘growing’ just because it is registering decent sales initially.

Here it is important to differentiate sales and marketing. A great sales may not mean a great marketing strategy. Sale may be short term and prone to evaporate but a rock – solid marketing strategy will definitely add values to the firm years ahead. Short sightedness is a curse that founders and business executives inflict on themselves. It makes them complacent, and they in turn put themselves in ‘growth’ oriented companies even if there are enough signs of an impending doom for the firm. The complacence that emanates from a short run strong sales or revenue can blind the management with pride, with them believing their strategy is foolproof.

They miss an important point in the process which often blinds them with vanity, so much so that they result in a downfall. The clear and crisp difference between sales and marketing needs to be understood by the E-commerce firms and worked along. A high sales may not mean a good marketing strategy. The underlying of Levitt’s findings was, that firms should focus on serving customer’s needs (marketing) and a false sense of comfort can arise due to ‘growth’(read, high sales). His proposition was right in the bull’s eye – that if you have to survive in the industry in the long run, you will have to understand what a customer wants holistically.

For example, a tea manufacturer who commands a high market share should understand he is not in tea business but he is in beverages business. The day when a delicious drink would go viral and replace the existing tea might be lurching at the door. Before a foreign firm takes advantage of any such voids in consumer preference, the tea selling firm mentioned above should take the lead and do the same itself.

A lot of lessons are to be learned by this example for the Indian E-commerce space. With the increasing losses of Indian platforms like Flipkart, it becomes important to ask ourselves – are the companies listening to customers, or are they trying to force a habit down our throat, and inflate the proof of their success by heightened sales figures.

The needs of an average middle class customer are still unsolved after more than 5 years of arrival of E – commerce in India. A lot of questions about impending failure of such firms can be answered by asking the basic questions Levitt asked more than 50 years back. Are the E – commerce firms catering to customer needs? I do not think so. Are these firms proud of their sales without considering customer satisfaction? – Very much yes!

Marketing is defined as a process to identify and cater to customer demand, and it is assumed to be the most important factor in survival of a company. Sales, which is often short term is often not just useless but is detrimental because it blinds us from reality and puts us inside a complacent cocoon. At the end of the story it seems most of the customers are going back to brick-and-mortar from e-markets and the reason precisely being the utter failure of their management to cater to their needs. The bubble of sales (mostly Gross Merchandise Value) is bound to burst someday.

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