 "It's time companies understood consumer psychographics: Nissan Joseph")
Don’t give heavy discounts to maintain your brand’s image online, Nissan Joseph tells Rohit Nautiyal
As more consumers come online to buy items of day-to-day requirement, what will be the future of impulse buying online?
The average ticket of an impulse purchase of a related or unrelated item online is always higher than the ones happening at a physical store. For example, you walk into a WH Smith store at Indira Gandhi International Airport in Delhi to buy a book. Even if you pick up a bottle of water, gums and chocolates, the ticket size of all these unrelated impulse purchase items will not be more than the price of the book. When it comes to shopping online, this theory falls flat. An online shopper may come on a website with the intention of purchasing her favourite author's new title and decide to buy a dress worth three times the price of the book. What I mean is that average incremental purchase is usually of a higher ticket online. Crocs along with different search engine companies is channelising its resources to understand consumer psychographics. This is different from keeping track of customers who are pressing the 'Like' tab on Crocs India's Facebook page. Today with search engine optimisation we can turn customers who are looking for 'baby diapers' into Crocs buyers.
The barrier to entry in any store today is the inability to invest in the right CRM (customer relationship management) software. Then to store consumer data and to migrate it from one store to the other is another challenge. With the cost of technology coming down, there will be high uptake of effective CRM solutions. Having said that, today many leading players like Shopper's Stop and Metro Shoes have mined useful shopper data. The problem is, there is no mechanism to assess what all a consumer could be interested in before she completes the purchase. Ten per cent of Crocs India's annual sales is coming from e-commerce websites. We plan to hit the target of 40 per cent sales from e-commerce platforms in the next five years. While through e-commerce we can serve 20,000 zip codes, brick-and-mortar stores cover hardly 4,000 zip codes.
It is getting harder to shop at malls anyway. For us, online marketplaces have proven to be useful platforms for test marketing new products. For instance, we launched a range of designer shoes exclusively on Jabong. Since the range sold quickly online, we are planning to bring this into our physical stores. Imagine how cumbersome this launch could have been if we were to introduce the range first at our stores. For example, each of the 50 stores that we zero in for the launch will be required to keep at least 36 pairs. That comes down to 1,800 pairs for a test launch. As opposed to this, online, it took only 80 pairs and a couple of weeks for us to understand the potential of the range. E-commerce tells us what colour, price point and design is selling in various geographies. This data is more granular.
Do you think Crocs India has come to a point where it is facing a positioning crisis as customers recognise the brand mainly for its iconic clogs?
Globally clogs contribute less than 30 per cent of our overall sales. So rest of the business is growing as well. Out of six to eight window displays that we do each year, only one is the clogs. When customers allow you to invest beyond a star product, they trust your design and technical capabilities to come up with something better. Crocs is known for three things: fun, comfort and colour. Our main target group is people in the age group of 20 to 24 years who experiment with colours. Black and hot pink are two of the hot selling colours in India.
Crocs India is known for rarely giving discounts - even on online stores. Has this strategy worked out for the company?
Our enforcement team monitors Crocs' price, design and brand. Maintaining consistency in all these three areas is crucial. If an e-commerce website is selling our products without becoming an authorised distributor, we have every right to put a stop to this. It takes a lot of policing to do this. About a year back we decided to pull down Crocs inventory from all e-commerce websites. As a result, Crocs was not widely available in the first two quarters of 2014. The clean-up drive involved sending out thousands of letters to a number of e-commerce websites warning them about the consequences of intellectual property rights infringement. In the third quarter, with a clear understanding of our target group we partnered with Amazon and Jabong. In future we may expand to Flipkart and Myntra. But this is not something you can fix and forget. Fortunately technology has made brand policing really easy for companies.
As we speak, a lot of e-commerce companies are making losses while luring customers with heavy discounts. Last year, some Indian footwear companies produced 'made for e-commerce' ranges. Most of these collections were priced at Rs 899. By doing this, while these companies and their online channel partners did make decent margins, the brand value eroded. This is because if one makes a sizable portion of inventory available at a cheap price point even for two consecutive seasons, consumers form a certain perception of the brand in question. Later when these consumers walk into that same brand's physical stores and see other shoes priced Rs 2,500 and above, they tighten their purse strings. The only way to maintain your brand's image online is not to give heavy discounts. Today Crocs may not be the best footwear brand in terms of price, but we are certainly there in the top five.
MEET THE SHOW(E)MAN
As more consumers come online to buy items of day-to-day requirement, what will be the future of impulse buying online?
The average ticket of an impulse purchase of a related or unrelated item online is always higher than the ones happening at a physical store. For example, you walk into a WH Smith store at Indira Gandhi International Airport in Delhi to buy a book. Even if you pick up a bottle of water, gums and chocolates, the ticket size of all these unrelated impulse purchase items will not be more than the price of the book. When it comes to shopping online, this theory falls flat. An online shopper may come on a website with the intention of purchasing her favourite author's new title and decide to buy a dress worth three times the price of the book. What I mean is that average incremental purchase is usually of a higher ticket online. Crocs along with different search engine companies is channelising its resources to understand consumer psychographics. This is different from keeping track of customers who are pressing the 'Like' tab on Crocs India's Facebook page. Today with search engine optimisation we can turn customers who are looking for 'baby diapers' into Crocs buyers.
More From This Section
Currently there isn't enough data mining happening in India. What are the reasons behind this?
The barrier to entry in any store today is the inability to invest in the right CRM (customer relationship management) software. Then to store consumer data and to migrate it from one store to the other is another challenge. With the cost of technology coming down, there will be high uptake of effective CRM solutions. Having said that, today many leading players like Shopper's Stop and Metro Shoes have mined useful shopper data. The problem is, there is no mechanism to assess what all a consumer could be interested in before she completes the purchase. Ten per cent of Crocs India's annual sales is coming from e-commerce websites. We plan to hit the target of 40 per cent sales from e-commerce platforms in the next five years. While through e-commerce we can serve 20,000 zip codes, brick-and-mortar stores cover hardly 4,000 zip codes.
It is getting harder to shop at malls anyway. For us, online marketplaces have proven to be useful platforms for test marketing new products. For instance, we launched a range of designer shoes exclusively on Jabong. Since the range sold quickly online, we are planning to bring this into our physical stores. Imagine how cumbersome this launch could have been if we were to introduce the range first at our stores. For example, each of the 50 stores that we zero in for the launch will be required to keep at least 36 pairs. That comes down to 1,800 pairs for a test launch. As opposed to this, online, it took only 80 pairs and a couple of weeks for us to understand the potential of the range. E-commerce tells us what colour, price point and design is selling in various geographies. This data is more granular.
Do you think Crocs India has come to a point where it is facing a positioning crisis as customers recognise the brand mainly for its iconic clogs?
Globally clogs contribute less than 30 per cent of our overall sales. So rest of the business is growing as well. Out of six to eight window displays that we do each year, only one is the clogs. When customers allow you to invest beyond a star product, they trust your design and technical capabilities to come up with something better. Crocs is known for three things: fun, comfort and colour. Our main target group is people in the age group of 20 to 24 years who experiment with colours. Black and hot pink are two of the hot selling colours in India.
Crocs India is known for rarely giving discounts - even on online stores. Has this strategy worked out for the company?
Our enforcement team monitors Crocs' price, design and brand. Maintaining consistency in all these three areas is crucial. If an e-commerce website is selling our products without becoming an authorised distributor, we have every right to put a stop to this. It takes a lot of policing to do this. About a year back we decided to pull down Crocs inventory from all e-commerce websites. As a result, Crocs was not widely available in the first two quarters of 2014. The clean-up drive involved sending out thousands of letters to a number of e-commerce websites warning them about the consequences of intellectual property rights infringement. In the third quarter, with a clear understanding of our target group we partnered with Amazon and Jabong. In future we may expand to Flipkart and Myntra. But this is not something you can fix and forget. Fortunately technology has made brand policing really easy for companies.
As we speak, a lot of e-commerce companies are making losses while luring customers with heavy discounts. Last year, some Indian footwear companies produced 'made for e-commerce' ranges. Most of these collections were priced at Rs 899. By doing this, while these companies and their online channel partners did make decent margins, the brand value eroded. This is because if one makes a sizable portion of inventory available at a cheap price point even for two consecutive seasons, consumers form a certain perception of the brand in question. Later when these consumers walk into that same brand's physical stores and see other shoes priced Rs 2,500 and above, they tighten their purse strings. The only way to maintain your brand's image online is not to give heavy discounts. Today Crocs may not be the best footwear brand in terms of price, but we are certainly there in the top five.
MEET THE SHOW(E)MAN
- Nissan Joseph has extensive experience in manufacturing and sourcing footwear across the US and Asia. So far in his career, he has set-up distributor networks across Europe, Japan, Korea, China, Indonesia, Hong Kong and Middle East
- Prior to joining Crocs, he led Accessory Exchange, New York office, for two years in licenses and brands, serving multi-channel retail in global markets
- Joseph was a performing artist for 10 years before entering into the footwear industry