26 March 2014

E-commerce Companies in India

E-commerce Companies in India
            The Dotcom boom seems to be affecting India at a much higher rate in the last few years, as online portals have started using mass media campaigns to increase their brand awareness. It’s not just the big ones spending on TV ads but even the start-ups like Fabfurnish, an online furniture retailer will kick start its first television advertisement in January.
            According to the estimates, the advertising spent on online portals in the last two years has gone up. ‘TV campaigns help to educate and create much more brand awareness among consumers’, as claimed by the companies. Due to this, more number of internet users in India have started buying products online. The major players in this sector are Snapdeal, Flipkart and Fashion portal Myntra whose sales have increased considerably because of mass campaigns.
            The Indian e-commerce market is seeing a surge in growth. According to 2012 CRISIL report, Indian online industry will grow from 32 billion in 2012 to 100 billion in 2015. To add to the growth prospects of the industry, infrastructure such as internet connectivity is expected to grow exponentially in the country. Apart from Laptops and Desktop, mobile phones and tablets are becoming the major drivers. The Internet and Mobile Association of India (IAMAI) said India has 200 million internet users and the number is growing to rise by 18.53% in the coming year.
            The main reason for online retailers to advertise in mass media such as television is to bring more creditability. But the question is - whether TV advertisement brings in the expected return on investment (ROI)? In fiscal 2013, Jasper InfoTech – the parent firm of Snapdeal – posted looses of 120.1crore, wider than the 81.2crore loss in fiscal2012, according to the data filled with RoC. But as the Indian online market seems to be changing, Snapdeal expects to reach6220crore in gross sales by the next year, and profitability the year after. Even fashion retailer Myntra aims to be profitable by the end of 2104. In fiscal 2013, the company had sales of 212.4crore at a loss of 134.7crore according to the Ministry of corporate affairs website. Even Flipkart India – reported a loss of 281.7crore before extraordinary items and tax in fiscal 2013.
            Even though the online portals are at loss, the sales are increasing drastically year by year, and thus many companies are claiming to be profitable by the end of 2015.
Sources: - The Economic Times

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