A little over a year ago, e-commerce firms were riding a wave of good valuations and painting a rosy picture of the future. A year down the line the picture doesn’t quite seem to be rosy. With losses piling up, the e-tailersspent Rs7252 crore on advertising in 2016
The main question that arises is whether advertising is really required by these e-commerce firms? A number of businesses have been built with minimal or no advertising, examples of which are Google, Uber, and Amazon.
One thing that we can take from these non-advertisers is that making profits boils down to product and people. These brands focus on making high-quality products and trust the consumers and word-of-mouth to do their work.
Advertising, no doubt, will raise sales and grow consumers but it will also increase costs for e-tailers. Current advertising for the e-tailers seems to revolve purely around pushing promotions and sales. This is just another short-term effort to boost their sales.
This kind of advertising does not create a preference for brands. E-tailers might be living quarter to quarter without thinking about the future. So there in a vicious cycle, if they cut advertising cost, their revenue might fall which would be a bigger disaster.
