Future belongs to e-commerce and digital first

E-commerce in the Mena region is on the cusp of a disruption.

Souq.com being taken over by Amazon.com, and the launch of noon.com are some of notable high profile investments which indicate a clear emergence of e-commerce in the region. Then there came the game changer – Covid-19 that is fueling the fiery growth of this disruption which will benefit all the stakeholders. The Mena region’s e-commerce market is estimated to be $17.4 billion and growing at a CAGR of 28 per cent.

How are today’s businesses gearing up to this radical change?

The ‘e’ in business becomes increasingly important

In traditional stores, the shelf space is limited and expensive and thus most stores stock only fast moving products. Some bigger stores may experiment and keep a wider range of products but still limited to few per category. However in e-commerce, the virtual store space displays nearly unlimited brands & products catering to all needs, small or big.

Online shopping provides consumers with a novel experience that is spontaneous and at the same time enables them to discover new products and brands. This novel experience of discovery when shopping online makes them come back again and again.

E-commerce also allows us to pilot launch a product to specific geography niches. Scaling up and down has never been easier with e-commerce. It also enables marketers to quickly learn based on instant consumer feedback, ratings etc., understand what works and provide them with the best product.

Thus, e-commerce should now be an integral part of every business with devoted allocation of people and technology investments to remain competitive in this space.

The rise of digital first brands

If we were to summarize the last few years of e-commerce as crisply as possible, we can’t do any better than direct-to-consumer aka D2C. Once associated with catalogues and unpleasant late-night infomercials, D2C e-commerce brands are now household names. Companies like Dollar Shave Club, Kylie Cosmetics and Huda Beauty took a digital first approach and became giant retail forces by shunning traditional brand guardrails and transforming the way brands are built and marketed. In many ways, D2C brands represent the original promise of e-commerce — the ability to bypass the middleman and go straight to the consumer.

Traditionally, brands were able to build competitive advantage by scaling up their capabilities in Sales and Distribution, Advertising and Media Spends to dominate consumer mind space for gaining market shares and protecting them. However, the changing landscape is making these pillars of brand building weaker and newer communication channels such as social media for better consumer engagement and alternative shopping channels such as e-commerce are now emerging stronger to take the places of the traditional brand building pillars. However, the point to note here is that brand building will become ever so important even in the e-Commerce space.

Digital transformation can be a difficult task to conceptualize. If it were as simple as taking time tested marketing methods and converting them online, most businesses would have renovated into digital dynamos by now. In its place, going to a digital first approach means adapting your marketing specifically to the assets of the digital environment.

Digital first is a road that has its speed bumps

A big roadblock to building D2C e-commerce model is economics. The cost of customer acquisition and bringing consumers online is expensive at the start, though this progressively becomes cheaper as the business scales. To counterbalance these economics, it’s been vital to develop the right proposition to meet specific consumer needs and support it by the right order value to make it viable.

Digital first brands aren’t built on assurances, but on great experiences. As we’re constantly online, everybody can experience a brand when they want. This means the opportunities are infinite. But it also means brands really need to get to know their users. They should be a partner who has a conversation with you, not someone who merely talks to you.

The big question is whether this move to a D2C e-commerce model is here to stay. It’ll certainly become part of a multi-channel offering; whether it grows considerably is yet to be seen. The internet is a congested place and staying top of mind is a continual challenge. Digital brands are fierce competitors, since online is their main channel.

Krishan Kumar Chutani is the CEO of Dabur International. Views expressed are his own and do not reflect the newspaper’s policy