What Is ROI?

Return on Investment, commonly referred to as ROI, is a crucial financial metric that measures the profitability of an investment relative to its cost. In essence, it evaluates how effectively an investment generates profit in comparison to the initial amount invested.

How Do You Calculate It?

Calculating ROI is a straightforward process that involves dividing the net profit generated from an investment by the initial cost of the investment and then expressing the result as a percentage.

The formula for calculating ROI is as follows:

ROI = [Cost of Investment / Net Profit]×100

What Is A Good ROI?

The interpretation of a “good” ROI varies depending on the context of the investment, the industry, and the company’s objectives. Generally, a positive ROI indicates that an investment has generated more profit than its cost, making it a worthwhile endeavour.

However, what constitutes a “good” ROI can differ widely. An ROI of 10% might be impressive for a stable, low-risk investment, while a high-risk venture might require an ROI of 30% or more to be considered successful.

What Are The Factors Determining The Return On Investment?

• Investment Type: The nature of the investment, whether it’s in stocks, real estate, marketing campaigns, or research and development, greatly influences the potential ROI.
• Timeframe: The duration over which the investment generates returns affects the overall ROI. Short-term investments might yield quicker returns, while long-term investments may require more patience.
• Costs: The initial cost of the investment, along with any ongoing expenses, impacts the ROI. Higher costs can reduce the overall profitability.
• Market Conditions: External factors such as economic conditions, industry trends, and market demand can significantly influence the success of an investment.
• Risk: Risk and ROI often go hand in hand. Investments with higher risk may offer the potential for greater returns, but they also come with an increased chance of loss.
• Management & Strategy: How well an investment is managed and the strategies employed to maximise returns play a pivotal role in determining ROI.

How Can You Maximise It?

Maximising ROI requires strategic planning, informed decision-making, and effective execution. Here are some strategies to enhance your investment returns:

• Thorough Research: Conduct extensive research before investing. Understand the market trends, potential risks, and growth prospects to make informed decisions.
• Diversification: Spread your investments across different assets or industries to minimise risk. Diversification can help protect your portfolio from significant losses.
• Set Clear Objectives: Define clear investment objectives and goals. Are you seeking short-term gains or long-term stability? Having a clear vision guides your investment choices.
• Risk Management: Assess and manage risk effectively. While higher-risk investments can yield substantial returns, it’s essential to balance risk with potential rewards.
• Continuous Monitoring: Regularly monitor the performance of your investments. Be prepared to make adjustments based on changing market conditions and new opportunities.
• Invest In Learning: Stay informed about the investment landscape. Continuous learning about financial markets and trends can help you make informed decisions.
• Cost Reduction: Minimise unnecessary costs associated with your investments. High fees and expenses can eat into your returns over time.
• Optimise Marketing Efforts: In the context of business, optimising marketing campaigns is essential. Use data-driven insights to allocate resources effectively and target the right audience.
• Customer Satisfaction: For businesses, delivering exceptional customer experiences can lead to repeat business and positive word-of-mouth, ultimately contributing to increased revenue.
• Innovation & Research: Invest in research and development to create innovative products or services that can open up new revenue streams and give you a competitive edge.
• Employee Training: For companies, investing in employee training and development can lead to higher productivity, improved quality, and enhanced customer satisfaction, all of which contribute to a healthier bottom line.

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What Is Customer Lifetime Value?

In simple words, the customer lifetime value (CLTV) is the average amount a customer will spend on their products/services. CLTV is also a key metric to gauge how well the brand’s products/services resonate with customers, offering insights to further improve their products and services.

Why Is Customer Lifetime Value Important?

CLTV provides data-driven insights into the relationship that a brand shares with its customers. Based on this information, the brand can create strategies to improve customer acquisition, retention, support and product quality. 

Not just this, D2C platforms can also employ CLTV to improve their operations, increase profits and top line, and make product modifications based on customer preference and spending habits. 

Overall, CLTV helps enhance business profitability and enables companies to refine strategies based on the metric’s trends. If CLTV increases, it means that the brand’s investment in product development and customer has been successful but if it decreases, it indicates the brand needs to re-evaluate marketing tactics. 

How Is Customer Lifetime Value Calculated?

CLTV is calculated by multiplying the value generated from a customer’s purchases with the average duration that the customer remains engaged with the business. This together estimates the total value a customer brings over their lifetime as a customer.

How to calculate CLTV:

Customer Lifetime Value = (Customer Value * Average Customer Lifespan)

How To Improve CLTV?

Take frequent customer feedback to understand factors contributing to the customer’s lifetime value. This can be done by talking to the customers who have made frequent purchases and by conducting surveys to gather insights about product usage, preferences, and improvements.

Increase prices of products and services in a manner that they are appropriately valued and aligned with market trends.

Deploy tactics like upselling, cross-selling and offer add-ons periodically to increase revenue from existing customers.

Brands can also create loyalty programmes or offer exclusive content to make customers feel valued and recognised. This, in turn, can help D2C brands foster brand loyalty.

Another key aspect of CLTV is customer experience. Brands can boost retention rates and subsequently increase customer lifetime value by mapping out customer journeys, ensuring efficient customer support and offering self-service solutions.

What Are The Challenges Of CLTV?

While CLTV is a key metric to measure a brand’s success, there are certain roadblocks in measuring CLTV. Some common ones include:

• Customers interact with brands through various channels such as social media, and email, among others, making it challenging to measure their actions, in turn, making it difficult for brands to gauge what kind of customers are adding value to their business.
• When data is siloed within an organisation, CLTV is negatively impacted due to a lack of coherent marketing as departments work independently without giving data access to one another.
• Inadequate technology systems and integration hinder the customer experience and the ability to build CLTV.
• Different product categories and demographics complicate the calculation of CLTV.

What Is The Difference Between CLTV And LTV?

Customer Lifetime Value (CLTV) looks at each customer’s spending on a brand’s product to understand its worth. It tells a brand how much each person is spending on its products and services over time. This information helps brands gauge who are their most valued customers. 

Lifetime Value (LTV) is similar to CLTV, but it provides a birdseye view by looking at all customers’ spending together. It helps the brand understand how much money all the customers bring to the brand over time. This also enables brands to decide how much money they can spend on advertising and marketing to target new customers.

So, CLTV focusses on each customer’s value, while LTV looks at the overall value of all customers. These metrics show a business where to find the most profits by understanding their customers’ spending patterns better.

How Does Customer Relationship Management (CRM) Help In Improving CLTV?

A CRM (Customer Relationship Management) system helps in enhancing CLTV by facilitating seamless and personalised interactions with customers. It is a tool that gathers information about its customers’ shopping and engagement patterns with the brand. It helps different teams in the brand work towards facilitating a seamless CX. 

Here’s how CRM is helpful: 

• It reduces customer attrition by comprehensively understanding customers. CRM assists in addressing their concerns leading to improved customer satisfaction and decreased customer churn.
• It segments customer groups based on behaviours and preferences for a personalised offering and engagement. It enables tailored promotions and product offerings for various customer groups, potentially boosting their spending.
• CRMs provide predictive analytics for estimating a customer’s future spending, aiding businesses in prioritising customers likely to generate higher revenue over time.
• These predictive analytics also provide insights offered by a CRM for businesses to make informed decisions regarding growth strategies, revenue projections and resource allocation, contributing to improved CLTV outcomes.

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What Is Conversion Rate?

A conversion rate indicates how individuals completed a desired action like clicking an ad on a website, in comparison to the total number of visitors. 

In the context of marketing, ‘conversion’ refers to the action by the target audience in response to a specific call to action such as opening emails, registering on websites or making purchases. 

These actions demonstrate engagement, acting as key performance metrics (KPI). Websites can store their information while they are in ‘action’ to improve targeting. This makes them closer to becoming customers. Therefore, it is crucial to structure websites and marketing materials to encourage these actions for greater success.

How To Calculate Conversion Rate?

To calculate the conversion rate, brands should examine how many times users performed the desired action, such as making a purchase, against the total ad views. 

For instance, if there were 50 purchases out of 1,000 ad views, the rate would be 5% (50 ÷ 1,000 = 5%). 

If different actions are being counted or every action is tracked, the rate could exceed 100%. Utilising conversion tracking assists in determining these rates and helps in making more informed advertising and marketing decisions.

What Is Conversion Rate Optimisation?

Conversion rate optimisation (CRO) means getting the users to take the desired actions on a website like getting them to click a CTA or buy a certain product/service. This helps in getting more potential customers. CRO can be achieved by making the website better, experimenting with different marketing strategies and improving how things happen step by step. When CRO is successful, brands get potential customers, generate more revenue and reduce customer acquisition costs.

What Is A Conversion Tracking Tool?

Conversion tracking is a tool that provides insights into how users respond to advertisements and marketing campaigns on websites. It tracks the actions people take after seeing an ad, such as making a purchase, subscribing to a newsletter, contacting a business, or downloading an app. When these actions align with a campaign’s goals then they are called conversions. 

What Are The Benefits Of A Conversion Tracking Tool?

A conversion tracking tool helps in understanding:

• The effectiveness of keywords, ads, ad groups, and campaigns in encouraging meaningful customer interactions with users.
• It helps in understanding the return on investment (ROI) of ad spending.
• It helps track cross-device and cross-browser activities, allowing marketeers to track conversions that occur on different devices or browsers.

What Are The Challenges When Trying To Improve  Conversion Rates?

Understanding common mistakes in conversion rates is important as different advertising platforms might define “impressions” in unique ways, affecting how you measure your ads’ visibility. For instance, Google counts impressions based on how often an ad is displayed, while Facebook counts each new instance an ad is seen on the screen. 

Another misconception is assuming that a high conversion rate means a successful ad. Clicks don’t always translate to purchases. An ad might attract the wrong audience. If your ad gets many clicks but few purchases, it’s important to assess each step of the buying process to identify where potential customers lose interest.

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What Is Cost Per Acquisition Cost (CPA)?

CPA is a metric for businesses to understand how much to spend on marketing to acquire a customer. It helps businesses see how well their marketing is working. CPA is important because it provides businesses insight into the financial impact of their marketing campaigns for customer acquisition.

It is especially crucial for D2C brands to know their average order value and customer lifetime value to decide on an acceptable CPA. While conversion rate indicates campaign success, CPA gives a deeper view of the financials of a business. CPA is used in various types of advertising like pay per click, affiliate marketing, and social media.

How To Calculate CPA?

CPA measures the cost incurred by a business to acquire a new customer or gain a desired action through advertising/marketing. Businesses divide the total ad spending by the number of new customers or actions like clicks/impressions. For instance, if a $1,000 Facebook campaign brings in 50 sales, the CPA is $20 per sale. This shows the cost for each successful outcome from advertising efforts, whether it’s product sales or simply an action of signing up.

What CPA Is Perceived As Favourable From A Business Perspective?

Typically, a favourable CPA depends on the specific industry and goals of the campaign. From a business perspective, the idea is to ensure that the money spent on ads brings in more money than it costs. A good CPA helps a business make more profit while reaching a lot of people.

It is common for brands to exceed their set budget for acquiring new customers. However, it’s important to keep this cost under control for profitability. Comparing a business’ CPA with that of other similar businesses can give a sense of how well the business is doing in terms of CPA.

Cost Per Acquisition (CPA) VS Cost Per Lead (CPL)

Cost Per Lead (CPL) shows the total expense incurred by a company to generate a single potential customer lead. CPL costs include advertising, inbound marketing, and other marketing costs. 

How To Minimise Cost Per Acquisition?

• To lower the CPA, businesses should optimise ad copies by crafting emotionally compelling content that captures attention and triggers action more effectively than logic-based appeals.
• Businesses should prioritise retaining existing customers to save acquisition costs and boost overall revenue, as retained customers tend to generate more value over their lifetime association with a brand.
• Enhance landing pages with intriguing headlines, no external links and engaging video content to effectively convey the offer value and encourage conversions.
• Leverage customer relationship management (CRM) to segment leads based on their conversion potential, enabling focused efforts on high-potential leads and reducing unnecessary spending.
• Businesses can regularly market research to help tailor messaging to address target audience needs, resulting in more relevant ads, increased engagement and higher conversions.

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What is Supply Chain Management?

Supply chain management (SCM) is the strategic orchestration of activities that encompass the planning, sourcing, manufacturing, distribution and customer service aspects of a product’s journey from inception to consumption. SCM seeks to optimise efficiency, reduce costs and enhance customer satisfaction throughout this intricate process.

Supply chain management can be categorised into various types:

• Lean Supply Chain: Focusses on minimising waste and maximising efficiency.
• Agile Supply Chain: Emphasises flexibility and responsiveness to changing market demands.
  
• Green Supply Chain: Aims to reduce the environmental impact by promoting sustainable practices.
  
• Reverse Supply Chain: Deals with the return and recycling of products and materials.

In addition, key function areas of supply chain management include:

• Planning: Forecasting demand, aligning production and scheduling resources.
• Sourcing: Selecting suppliers, negotiating contracts and managing relationships.
• Manufacturing: Overseeing production processes, quality control and efficiency.
• Distribution: Optimising the movement of goods, warehousing and transportation.
• Customer Service: Ensuring timely and accurate delivery, and addressing customer concerns.

What Is The Difference Between Logistics And Supply Chain Management?

Logistics is a subset of supply chain management that specifically focusses on the planning, implementation, and control of the efficient movement and storage of goods, services, and information within and between organisations. While supply chain management encompasses a broader spectrum of activities, logistics is a crucial component that ensures the seamless flow of products.

Why Is Supply Chain Management Important?

Effective supply chain management holds paramount importance for several reasons:

Cost Efficiency: Streamlining the supply chain reduces wastage, enhances resource allocation and lowers operational costs.

Customer Satisfaction: Efficient supply chain management ensures timely and accurate deliveries, enhancing customer satisfaction and loyalty.

Competitive Advantage: A well-managed supply chain can lead to faster time-to-market, giving businesses a competitive edge.

Risk Mitigation: Supply chain management identifies and addresses potential disruptions, minimising risks.

What Is Global Supply Chain Management?

Global Supply Chain Management

Global supply chain management pertains to the complex coordination of activities across international borders. It involves managing diverse regulations, customs, cultures and time zones to ensure a seamless flow of products.

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What Is A CTR?

Click-through rate (CTR) is a digital advertising term that refers to the percentage/ratio of clicks on an advertisement to the number of views on the ad posted by a marketer on a website. CTR is important because it measures the success of an advertising campaign.

How To Calculate CTR?

Why Is CTR Important?

CTR is important for D2C brands because it measures the success and the failure of a brand’s advertisement. CTR tells the brands how relevant their ads are to the target audience. Improving the CTR raises the chances of improving conversion rates, which ultimately helps in increasing the revenue of the brands. 

How To Improve CTR?

• A brand can start by analysing its past marketing campaigns by reviewing the performance of previous emails to identify areas for improvement.
• When sending out emails, focus on one call to action (CTA) and keep the CTA very clear. This will help the target audience focus on a single task and theme, which may result in higher CTR.
• It is a good idea to address the recipients by their names or reference past interactions for personalisation.
• Tailor content for the target audience by creating content specific to the interests of the intended recipients.
• Marketers should write engaging copies. The content must be concise and have compelling text to maintain reader interest and include images to visually enhance the content. 
• Optimise the content for mobile, ensuring that emails display properly and are easy to read on mobile devices.
• The content must have a conversational tone as if speaking to a friend by using approachable language.
• If possible, incorporate social proof like customer testimonials or success stories to build credibility and gain customers’ trust.
• Use time-sensitive language to create urgency to prompt immediate action from the customers.
• Brands should schedule emails when recipients are likely to engage with them.

What Is A Good CTR?

A “good” CTR depends on factors like campaign, keywords, and ad purpose. Industry benchmarks and ad position impact CTR expectations. Benchmarks reveal diverse industry averages. For instance, legal services brands aim for 5-6% CTR, while those in arts/entertainment target 11-12% CTR. Generally, a CTR of over 6-7% is considered solid.

How To Improve CTR For Facebook Ads?

• Consider narrowing your audience by segmenting them into specific groups rather than a broad one, enabling more tailored messaging that resonates and drives higher engagement. For instance, an online fitness equipment store could target ads specifically to individuals who have shown interest in home workouts, rather than a generic fitness audience.
• Run retargeting campaigns by reconnecting with users who have previously engaged with your brand but haven’t converted. Brands can show relevant ads and increase their chances of them clicking and converting. For example, an online clothing store could retarget users who added items to their cart but didn’t complete the purchase.
• Employ engaging visuals by using videos, GIFs, and infographics to catch the user’s attention to halt their scrolling session to interact with the ad. For example, an electronics retailer can use a short video showcasing the features of a new smartphone.
• Try creating content that is relatable and addresses the audience’s pain points or needs along with a clear CTA. 
• Include positive reviews, testimonials or user-generated content in your ads to build trust and credibility. For example, a restaurant ad could include a quote from a satisfied customer.
• Before making the ad live, split test everything via A/B testing. Create variations of different ad elements to see which combinations resonate best. For instance, an ecommerce store could test two different headlines, one focusing on discounts and the other on product features. Analyse the results and modify the strategy.

How To Improve CTR For Google Ads?

According to Google, the following are effective practices to improve CTR for Google ads:

• Marketing campaigns must ensure that the ad details match the intent of the keywords. This ensures that users who click on the ad find exactly what they’re expecting on the landing page.
• Consider highlighting the unique benefits of the product/service like free shipping, and explain the USP of the product or service offer which could encourage users to click.
• Experiment with different CTAs for the landing page that will directly relate to the action users will take on the landing page. This will improve the UX, which will lead to higher CTR. Play around with words and phrases like “buy, sell, order, browse, find, sign up, try, get a quote”. Use verbs that resonate with their intent.

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What Is Competitive Analysis?

Competitive analysis is the process of analysing the strategy employed by competitors to stay ahead of them. It includes researching the competitors’ sales, products, SWOT (strengths, weaknesses, opportunities and threats) and marketing strategies. 

Competitive analysis is important for a brand as it can build business strategies based on the analytical reports to gain a competitive advantage and create an opportunity to dominate the market. 

How To Conduct A Competitive Analysis?

Josh Ronver, an American business consultant and author of ‘Unbreak the System: Diagnosing and Curing the Ten Critical Flaws in Your Company’, has laid down some critical points to remember while conducting a thorough competitive analysis.

He suggests starting with identifying the competitor’s products/services. For this, a brand needs to first identify the key offerings from its own product portfolio that are generating high revenue.

After identifying the unique selling points of its own products, the brand should identify businesses with similar products targeting the same market. This includes identifying companies serving the same market with different products.

Ronver also suggests analysing other businesses which offer different solutions but are addressing the same pain points.

Once the above have been identified, the brand must carefully examine each business’ pricing, distribution channels, market share, customer base, sales support, and marketing strategies.

The brand can then start gathering data on product features, target customers, staffing, and pricing and create a concise, actionable report with comparison charts and graphs. Based on the data analysis, the brand can enhance its products, services, pricing, and support and then track the results with profit and loss statements to assess the impact of changes.

Experts believe that brands can conduct a large-scale analysis once a year and a quarterly small-scale analysis. 

What Is Competitive Landscape Analysis?

Simply put, competitive landscape analysis is the process of examining the market for direct and indirect competition. These are the five frameworks of a competitive landscape.

SWOT Analysis: It involves examining the strengths, weaknesses, opportunities and threats of the competition in question. It helps generate insights for strategic planning to seize opportunities and counteract threats. 

Strategic Group Analysis: It is a method to organise competitors into groups based on criteria like product diversity, markets served and distribution channels. It helps pinpoint the closest competitors and understand competition relationships.

The Boston Consulting Group Matrix (Growth-Share Matrix): This involves examining the competitors based on their growth rate and market share.

Perceptual Mapping: It takes into account customer perception to analyse the competition. 

Porter’s Five Forces: This analysis of overall market competitiveness is based on competitive intensity, supplier power, buyer entry/exit costs, threat of substitutes, and new entrant access.

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What Is Content Marketing?

Content marketing is the process of planning, creating, publishing and sharing content useful on multiple platforms, predominantly in the forms of blogs, newsletters, social media posts, emails, and videos, to reach the target audience. 

It is a marketing strategy used by brands to retain current customers and reach out to potential customers.

Why Is Content Marketing Important For Startups?

Here are some of the reasons why businesses should use content marketing:

• Content that provides value to the target audience helps in boosting loyalty among the customers and fosters a stronger relationship.
• Content marketing drives audience engagement that encourages the target group to interact with the website and other touchpoints of a brand for content consumption again and again.
• When a brand publishes insightful content that showcases expertise in the field, it positions itself as an authority within the specific industry.
• A brand can leverage content marketing to generate leads by attracting the target audience with free but relevant information and strategically placing CTAs for generating leads. This can potentially aid in boosting conversion. 
• If a brand consistently churns out good quality content, it helps improve its SEO ranking and online visibility.

How Does Content Marketing Work?

To make the most of their content, brands tailor their content to cater to the different stages of a sales cycle:

Awareness Stage: The content in this stage is around addressing the target group’s pain points, challenges, and questions with educational content like articles, blog posts, ebooks, videos, and newsletters. Avoid making it look like an advertorial. For instance, a bike touring company can put up content like ‘3 Ways to Choose the Right Bike Trip’.

Consideration Stage: This is the next stage that combines informative content with marketing. The content in this stage addresses the needs of the target group and then natively integrates its products/services and shows how they address those needs. Brands can publish this in the form of case studies, how-to articles, videos, and checklists. Examples: Cloud-based phone system company’s checklist – ‘8 Ways to Improve Your Phone Customer Service’.

Closing Stage: In the closing stage of the sales cycle, customers are close to making a purchase. At this stage, a brand should create and curate content in a way that highlights why its product or service is the best choice for them. This content should demonstrate the brand’s expertise and unique qualities. Such content can be supported by using testimonials, videos, guides, and research reports. 

How To Get Started With Marketing Content?

• Start with identifying the audience. This first step involves understanding the priorities, challenges and preferences of the target audience and then developing profiles of audience members to tailor content effectively.
• Choose a distribution channel where the target audience will likely engage with the content. Opt for formats that align with the chosen distribution channel – for instance, use emails for longer content like article blogs and post shorter content like checklists on social media.
• Develop a short-term plan spanning three to six months based on the audience and suitable formats. Avoid overly ambitious plans that could strain resources and budget. Keeping track of the content creation timeframe aids in effective schedule management.
• Creating content that is easy to understand, devoid of jargon, and offers practical advice is fundamental. The content’s relevance and action-oriented nature play a pivotal role in engaging the audience successfully.

What Are The Types Of Content Marketing?

As per experts, these are some prominent types of content marketing that are being practiced:

• Online content marketing is publishing content on websites to improve search engine rankings and engage the right audience. 
• Social media content marketing is leveraging platforms like Facebook, Instagram, and LinkedIn to create and share content that use visuals such as photos, videos, and stories to leverage a large user base.
• Infographic content marketing is employed to present information and data in a visually appealing format through infographics, making complex topics easier to understand.
• Blog content marketing is used to creatively cover various topics, promote internal and external content, and natively incorporate product information.
• Podcast content marketing is fairly new but has been gaining momentum over the past few years. It involves creating and sharing podcasts on platforms like Spotify and Apple. It allows flexibility in content, episode flow and conversational style.
• Video content marketing has also been gaining popularity in recent times. It works especially well in short video format, given the rise of reels on Instagram. Consumers prefer videos to learn about products or services. These videos can also be shared on social media, landing pages, and more.
• Paid ad content marketing reaches a wide audience and enhances visibility. It is particularly effective when paired with inbound marketing strategies. Paid ads can be placed on social media, landing pages, banners, and sponsored content.

Which Indian Companies Are Known For Their Content Marketing Strategies?

The following are some of the Indian companies which are known for their effective and successful content marketing strategies:

• Amul is known for its memorable ads. It engages with consumers by creating content that is relevant at the moment. It creates content using humour, such as memes that change according to events.
• Myntra, a popular online fashion brand, has collaborated with influencers who have millions of followers on social media. It creates content utilising digital marketing strategies like search engine optimisation (SEO), email, social media and WhatsApp marketing to increase revenue. It also uses blogs on its own app that talk about the latest fashion and trends.
• Food delivery giant Zomato is widely appreciated by netizens for its content market strategies. It uses unique strategies like sending push notifications with Bollywood dialogues, customised notifications based on past orders, and weather. The brand also maintains a strong presence across social media platforms.

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What Is Last-Mile Delivery?

Last-mile delivery refers to the final leg of the logistics process, during which products are transported from a distribution or fulfilment centre to the end destination. It is the stage that directly impacts customer satisfaction and plays a significant role in shaping the overall impression of a brand.

Some examples of last-mile delivery companies are Flipkart, Amazon India, Delhivery and Shadowfax.

What Is The Difference Between First-Mile & Last-Mile Delivery?

What Are Some Of The Challenges That Last-Mile Delivery Companies Face In India?

• Traffic Congestion: In India’s bustling cities, traffic congestion can lead to delays and inefficiencies in last-mile deliveries.
• Address Complexity: Inaccurate addresses and lack of standardised addressing systems can pose challenges for accurate deliveries.
• Rural Reach: Ensuring efficient last-mile deliveries in remote and rural areas remains a big challenge.

Many companies are deploying innovative solutions to enhance last-mile deliveries in India to counter the aforementioned challenges. Some of these innovations are:

• Drones and Autonomous Vehicles: Some companies are experimenting with drones and autonomous vehicles to navigate through congested areas and expedite deliveries.
• Micro-Fulfilment Centres: Setting up small-scale fulfilment centres closer to densely populated areas can optimise last-mile deliveries.
• Technology Integration: Real-time tracking, route optimisation, and artificial intelligence are being leveraged to enhance delivery accuracy and efficiency.

What Is The Role Of Last-Mile Deliveries In Enhancing Customer Experience?

In the age of ecommerce, last-mile deliveries have become synonymous with customer experience. A positive last-mile experience can lead to increased customer loyalty and brand advocacy. However, a delayed or mishandled delivery can result in dissatisfaction and potential customer loss. Companies that prioritise seamless last-mile deliveries gain a competitive edge by meeting and exceeding customer expectations.

Customer experience (CX) isn’t confined to the moment of purchase, it extends to the post-purchase phase. This subsequent experience, notably in shipping and delivery, holds equal importance in shaping whether a customer will return to a brand. Research indicates that approximately 50% of consumers express that a poor post-purchase experience, including shipping issues, can deter them from future purchases. This underscores the pivotal role that efficient last-mile delivery plays in ensuring customer loyalty.

Focussing on same-day or next-day deliveries has become a strategic imperative to enhance CX. In today’s fast-paced world, customers seek swift gratification, making rapid delivery a vital factor in brand perception. Successful implementation requires aligning warehousing, transportation, and technology systems for efficient order processing and prompt delivery. Swift deliveries meet customer expectations for speed and contribute to reducing cart abandonment and increasing conversions, ultimately bolstering a brand’s success.

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What Is Dropshipping?

Dropshipping is a retail fulfilment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product. This unique model eliminates the need for inventory management, making it an attractive option for budding entrepreneurs.

How To Start A Dropshipping Business?

• Select A Niche: Choose a niche that aligns with your interests and has a viable market. Research the demand and competition within the chosen niche.
• Legal Formalities: Register your business according to the legal requirements in India. Choose a suitable business structure and obtain any necessary licences.
• GST Registration: Obtain Goods and Services Tax (GST) registration, as it is mandatory for selling products online in India.
• Create An Online Store: Set up your online store using ecommerce platforms like Shopify, WooCommerce, or BigCommerce. Customise your store’s design and layout.
• Product Selection: Curate a catalogue of products from your chosen suppliers. Ensure high-quality images and compelling product descriptions.
• Price Setting: Determine competitive yet profitable pricing for your products. Consider factors like product cost, shipping fees, and your desired profit margin.
• Payment Gateways: Set up secure and efficient payment gateways to facilitate seamless transactions.
• Marketing Strategy: Develop a marketing plan to attract customers to your store. Utilise social media, content marketing, and paid advertising.
• Order Management: As orders come in, forward them to your suppliers for fulfilment. Keep track of shipping and delivery to ensure a smooth customer experience.

How To  Start Dropshipping With Least Cost?

While some initial investment is often necessary for a dropshipping business, there are ways to minimise costs:

• Platform Selection: Opt for ecommerce platforms that offer free trials or open-source options.
  
• DIY Design: Create your store’s design and brand yourself using free online tools or software.
  
• Content Creation: Produce high-quality product images and descriptions without outsourcing.
  
• Social Media Marketing: Leverage the power of social media to market your products for free.
  
• Start Small: Begin with a limited product range to reduce upfront costs.

To successfully run a dropshipping business in India:

• Choose Reliable Suppliers: Opt for suppliers who offer reasonable shipping times to India and have a track record of quality products and services.
  
• Local Payment Methods: Integrate payment gateways that support popular local payment methods, such as UPI, digital wallets, and net banking.
  
• Customer Support: Provide efficient customer support to address queries, concerns, and shipping-related issues.
  
• Shipping And Delivery: Set clear expectations regarding shipping times, especially for international shipments.

How To Build A Profitable Dropshipping Business In India?

The profitability of a dropshipping business in India, as elsewhere, depends on various factors:

• Niche Selection: Choosing the right niche with demand and limited competition can significantly impact profitability.
  
• Marketing Strategy: An effective and targeted marketing strategy can drive more sales and higher profits.
  
• Supplier Relationships: Building strong partnerships with reliable suppliers ensures timely order fulfilment and customer satisfaction.
  
• Operational Efficiency: Streamlining order management and customer support processes contributes to cost savings and repeat business.
  
• Market Trends: Adapting to evolving market trends and consumer preferences is crucial for sustained profitability.

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What Is A Stock Keeping Unit (SKU)?

A Stock Keeping Unit, or SKU, is a unique alphanumeric code assigned to each distinct product or item in a company’s inventory. SKUs serve as a universal identifier that facilitates efficient tracking, management, and categorisation of products throughout the supply chain process.

How Do SKUs Define a Company’s Scale?

SKUs provide businesses with a scalable framework for managing their products. As companies grow and diversify their product offerings, SKUs allow for granular categorisation and differentiation of items. This scalability empowers businesses to maintain control over a vast array of products while optimising inventory turnover, order fulfilment and customer satisfaction.

Example of an SKU:

Imagine a clothing retailer that offers t-shirts in various sizes (S, M, L) and colors (Red, Blue, Green). To create distinct identifiers for each unique combination, the retailer assigns SKUs like “TS-R-S” for a red small size t-shirt, TS-B-M for a blue medium t-shirt, and so on. These SKUs help maintain accurate inventory records and streamline order fulfilment.

What Is The Difference Between SKUs & Universal Product Codes (UPCs)?

Why D2C Brands Should Have A Good Number of SKUs? 

For direct-to-consumer (D2C) brands, having a substantial number of SKUs can offer several advantages:

• Product Personalisation: D2C brands often cater to niche markets or offer customisable products. A wide range of SKUs enables personalised offerings to meet diverse customer preferences.
• Market Penetration: More SKUs provide an opportunity for D2C brands to enter multiple market segments and target a broader customer base.
• Competitive Edge: A diverse SKU portfolio enhances a brand’s competitiveness by demonstrating versatility and meeting various customer needs.
• Data-Driven Insights: Managing a larger number of SKUs generates valuable data insights, aiding in demand forecasting, trend analysis, and informed decision-making.

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What Is Brand Equity?

Brand Equity is the special or premium value attached to a brand and its products. It is based on the consumer’s perception and trust that they have in the brand. It is associated with a brand’s name and logo, and connecting “brand” to “equity” is an important business marketing strategy as it impacts brands’ prices, sales, and partnerships. 

According to American marketing veteran, David Aaker, brand equity is made of four elements that contribute to a brand’s strength.

Brand Awareness: Consumers should be able to recognise a brand. This can be achieved by associating a message and imagery with the brand to help make it identifiable, even for new products. 

Brand Attributes: This covers the product’s performance in the market, interactions with the brand representatives and customer service, and the worth of loyalty programmes. Positive experiences enhance the brand’s attributes.

Perceived Quality: It is important for brands to enhance the perceived value, as it improves customer experience and boosts sales. The perceived value is the customers’ judgment of the product quality based on their overall brand experiences. If past interactions with the brand are not good, customers may not react positively and may create a negative perception towards the brand.

Brand Loyalty: The process of loyalty is built over time, based on customers’ past and current experiences, brand recognition and brand attributes. While these components rely mostly on customer preference, enhancing these brand qualities can increase profits and customer influence.

By combining these factors, the brand can focus on consumers and foster lasting loyalty as consumer perception strongly impacts positive brand equity.

How To Measure Brand Equity?

To effectively measure it, a brand can consider the six metrics mentioned below:

Brand Awareness: This metric measures how much a brand is talked about in everyday conversations. Other elements like assessability through surveys, store traffic, search volume, media mentions and social reviews also enhance the brand awareness of a business.

Preference Metrics: This metric observes customer preference by evaluating a brand’s relevance, accessibility, emotional connection with customers and brand value through methods such as focus groups, sales data and surveys.

Channel Partner Engagement: This is an important metric to assess a brand’s relationship with its channel partners. It measures aspects like how well partners comply with guidelines and contribute to local marketing efforts and bigger marketing campaigns. Their attitudes can reflect a brand’s strength.

Financial Metrics: This area takes into account financial indicators like price premium, local store sales, transaction value, customer lifetime value and growth rate of brand equity.

Output Metrics: This metric is deployed to measure the marketing output by evaluating the frequency and quality of released marketing materials. It leverages local marketing metrics like price premium over competition, local store sales, average transaction value, customer lifetime value and the rate of sustained growth to measure local marketing activity’s impact on brand equity.

Competitive Metrics: This key indicator takes into account the impact of competitors’ brand equity on the brand. Brands must monitor customer acquisition rate, market share, sales lift and distribution channels to understand their performance in comparison to their competitors.

How To Improve Brand Equity?

Communicate with existing and prospective customers to understand brand equity and then work to improve it. Use customer feedback forms or dedicated email addresses to spot and fix customer issues swiftly. This will help build trust and improve customer retention.

• Foster relationships with customers by encouraging free trials of products and services. This will change them from customers into brand loyalists or brand advocates.
• Develop a brand story that communicates brand values. Create a compelling brand story on websites and share it on social media platforms and via emails to establish authentic connections with consumers.
• Invest in CX, identify customer pain points and create a brand experience that leaves customers more than satisfied at every touchpoint. Differentiating CX through a unique customer experience can enhance brand equity.
• Brands must regularly audit their marketing efforts to align their perception of the brand with consumers’ views. This can be achieved by gathering regular feedback from surveys, focus groups, and consumer research to ensure consistency.
• Build an in-house team to develop brand equity that outlines the brand’s philosophy, acceptable uses for brand assets and results from brand audits to improve brand equity. Distribute this to company executives regularly to stay focussed on equity-building goals.
• Design future marketing programmes to track marketing expenses. Build on past investments and guide future marketing strategies.

What Are The Different Models Of Brand Equity?

Keller’s Brand Equity Model

Developed by marketing professor Kevin Lane Keller at Dartmouth College, the model revolves around the concept that a brand’s strength comes from knowledge, emotions, and perceptions that consumers have about the brand throughout its existence. 

This framework is often referred to as the Customer-Based Brand Equity (CBBE) model. Essentially, the model emphasises that a brand’s value is built over time through the interactions, associations, and sentiments formed in the minds of consumers, shaping their loyalty towards the brand.

Aaker’s Brand Equity Model

Developed by David Aaker, who is also known as the father of modern branding, the model defines brand equity as a collection of assets and liabilities associated with a brand that either enhances or diminishes the value of products or services linked to that brand. This model, also known as the Five Assets Model, identifies five key components of brand equity.

What Are The Examples Of Brand Equity?

Nike: The company’s strong brand equity is built on positive associations with motivation and victory through impactful marketing campaigns and sponsorships of renowned athletes. Their brand also incorporates customer loyalty, perceived quality, and proprietary assets like the iconic swoosh logo and its  “Just Do It” tagline. This has enabled Nike to dominate the global athletic footwear industry.

Apple: Apple’s brand loyalty lies in its unique customer experience through minimalist design and innovative products that integrate seamlessly within its ecosystem. This experience enhances the perceived value and quality of Apple products, fostering strong customer loyalty even at premium price points.

Coca-Cola: Coca-Cola’s successful branding campaigns and slogans have synonymously positioned the brand with happiness and refreshment, elevating its perceived quality. This showcases the impact of strategic branding on enhancing product perception.

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What Is The Meaning Of B2B Model?

When a business sells its products or services to other businesses instead of an individual consumer, it is said to have a B2B model. Gartner defines B2B sales as transactions between two businesses characterised by larger transaction amounts, more educated buyers, and a multistakeholder approval process, leading to a longer sales cycle.

How Is B2B Different From B2C?

B2B and B2C are two different models of businesses that sell their products or services to different audiences. Some crucial differences include::

What Are The Different Business Models In India?

• Direct Model: Businesses sell directly to consumers through online portals or middlemen. These dealers or middlemen represent the company to customers. Examples: car dealers and online smartphone sales.
• Franchise Model: It is a contractual model under which an established brand allows franchisees or businesses to use its brand, and intellectual property, among others. The franchisee pays royalty and licence fees to the parent company.
• Aggregation Model: It connects users with providers through a platform. There is uniformity in payments, service, and technology. The model is boosting micro-entrepreneurship in India. Examples: Ola and OYO.
• Freemium and Subscription: It offers free and premium services to attract and habituate customers. They make revenue from advertisements. Examples: Hotstar (freemium) and BYJU’S (subscription). The subscription-based model involves paying for the entire service — for example, Netflix.

What Are The Benefits Of B2B Business Model?

• Selling through such channels like wholesale leads to wider exposure, further increasing brand recognition for the business, as retailers promote their products.
• B2B marketing involves minimal expenditure as marketing is done by resellers, saving businesses the need for extensive marketing budgets in comparison with DTC approaches.
• Another benefit is the lower customer acquisition costs. B2B buyers often take personalised approaches which reduce the cost of acquiring customers compared to mass DTC marketing.
• B2B customers tend to make more frequent purchases than individual consumers, driving higher sales volumes and revenue. 
• Long-term relationships with customers generate consistent and predictable revenue for the business. The predictability factor allows them stability against external factors. 
• B2B businesses have automated sales and business processes, which help in minimising errors and make sales more efficient. 
• B2B expansion allows businesses to distribute their products through partners, thereby removing international growth challenges.
• Orders often involve bulk purchases, resulting in lesser operational cost per unit. 

What Are The Challenges Of B2B Business Model?

Bulk Deal Pricing: Businesses often offer pricing based on volume. However, managing different pricing tiers for different quantities can be a complex and tedious process. 

Maintaining Client Relationships: B2B businesses need to track and manage each client’s account, which can be challenging when dealing with a large number of clients. Ensuring timely follow-ups and maintaining communication becomes crucial.

Customisable Shopping Cart: B2B companies that offer multiple product lines or brands need a platform that supports customised shopping carts to enable easy product comparison and selection for buyers, without which the process can be challenging.

Shipping Solutions: Timely and accurate order delivery is critical in transactions. Integrating shipping software to handle order processing, shipping calculations, and delivery information becomes a challenge that needs to be addressed.

Sale Completion Times: B2B buyers require multiple price quotes and approvals before finalising a purchase, leading to longer deadlines for sales as compared to B2C transactions.

Large Quantity Transactions: Handling large orders efficiently while maintaining a professional user experience can be a challenge.

Creating A User-Friendly Experience: B2B businesses must provide user-friendly experiences not only for customers but also for vendors who may need self-service options for order adjustments and flexible payment methods.

Establishing Advanced Logic: B2B companies need to set up complex pricing rules and discounts based on various factors like product categories, shipping options and loyalty programs.

Different Fulfilment Areas: Large B2B companies may have multiple fulfilment centres, which can complicate the process of managing customised shipping requests and ensuring efficient order fulfilment.

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What Is Brand Awareness?

Brand awareness means how customers perceive, recall and recognise a brand. It also measures the brand’s external perceptions, which plays a key role in building marketing strategies specific to business needs.

How To Create Brand Awareness?

In an era of fierce industry competition, every D2C brand must concentrate on its distinct attributes to cultivate brand awareness. Consider the following strategies:

• Craft Engaging Narratives: D2C brands should weave captivating and consistent stories about their identity, brand values and impact. These narratives forge an emotional connection with customers, broadening the brand’s reach.
• Drive Social Impact Campaigns: Aligning with its values, a brand can launch campaigns that contribute to societal well-being. This not only bolsters the company’s reputation but also draws in like-minded individuals who resonate with the cause.
• Leverage Multi-channel Promotion: To bolster brand awareness, capitalise on diverse promotional channels. Additionally, empower your employees to be enthusiastic brand advocates, extending the brand’s reach through their networks.
• Showcase Customer Success: Enhance credibility by incorporating testimonials showcasing positive customer experiences on your website or mobile app. These success stories serve to reinforce the brand’s reliability and trustworthiness.
• Utilise New Product Launches: Elevate brand awareness by introducing new products and furnishing valuable resources on your website/app. This underscores the brand’s expertise, adaptability and dedication to catering to evolving consumer behaviour.
• Precise Audience Research: Effective marketing starts with comprehensive audience research. Identify their pain points and then present your brand’s unique value proposition, positioning you ahead of competitors.
• Generate High-Quality Content: Establish a podcast and distribute LinkedIn and email newsletters to foster a loyal following. Podcasts also present opportunities for collaboration with industry leaders, amplifying audience outreach.
• Maintain Open Communication: Keep communication channels accessible to engage with followers. Encourage referrals to spur word-of-mouth growth, as referrals are instrumental in rapidly expanding brand awareness.
• Forge Partnerships: Collaborate with non-competitive companies targeting the same audience. By cross-promoting each other’s offerings, both entities can tap into a wider audience base.

Incorporating these strategies can significantly enhance your brand’s visibility and resonance in the competitive landscape.

How To Measure Brand Awareness?

What Are Brand Awareness Campaigns?

How To Make A Brand Awareness Campaign Successful?

• Start with understanding who the target audience is by analysing the existing customer base and conducting market research.
• To maximise the impact of the campaign, brands can leverage the platforms that their existing customers use often.
• Plan realistically to set achievable goals for the short and long term.
• It is a good idea to collaborate with allied brands to create brand value, increase exposure and expand reach.
• Engage with users online by responding to customer interactions and regularly posting content.
• Keep working towards improving customer experience to leave a positive impact and brand recall.
• Constantly track the campaign’s results by using relevant metrics to measure success and make improvements based on real data.
• Collaborate with social media influencers whose values align with the brand’s values to expand reach.

What Role Does Customer Experience Play In Brand Awareness?

How Does Brand Awareness Help In Driving A Brand’s Sales?

What Is Brand Awareness Pyramid?

• Zero Awareness: This comes right at the bottom of the pyramid. At this level, the customer has little to no awareness of the brand.
• Brand Recognition: At the third level, brand recognition allows the target audience to identify business visually through logos, slogans and packaging.
• Brand Recall: At this level, brands start coming to an individual’s mind when in need of products and services of the respective category.
• Top-of-Mind Awareness: The top level of brand awareness is when the brand’s product comes as the first product in the consumer’s mind when a certain need arises. Creating a top-of-mind awareness is crucial for customer loyalty and involves becoming the most frequently used brand in the respective category.

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What Is A Product Catalogue?

A product catalogue is a document, book or magazine that mentions all details and specifications about a product or a range of products. Catalogues are created to showcase products, provide comprehensive information to potential buyers and give customers the necessary data to make informed choices. 

In the context of ecommerce, an online version of a catalogue can be accessed by customers on a website, a mobile app or any other digital platform. 

What Are Some of The Key Advantages Of Maintaining A Catalogue?

• Customers are spoilt with choices online. A well-designed catalogue can help streamline the buyers’ purchase journey and ease their decision-making.
• Catalogues can help brands generate leads and sales by providing customers with a convenient way to browse and shop for products.
• It offers an overview of product information, aiding in organising and introducing new offerings.
• It improves the sales process by equipping a D2C brand with comprehensive product data for effective conversations and improved conversions.
• It provides marketers with product details for creating appealing content and advertisements.
• For brands with an offline presence, it allows external partners and on-the-field marketers to access accurate product details before engaging with customers.

What Goes Into A Product Catalogue?

• A visual representation of products, their specifications and price.
• A brief overview highlighting key descriptors of products.
• List of distinctive qualities or functionalities of products.
• Information about materials used.
• Guidelines for maintaining and preserving products.
• Mentions of relevant product certification.
• Shipping details such as delivery cost and estimated time of delivery. 
• Customer reviews or testimonials.

How To Manage A Product Catalogue?

Catalogue management means organising and overseeing a collection of products or services. This includes tasks like creating product descriptions, setting prices/discounts and managing inventory. Brands can use catalogue management tools to help in organising, storing, retrieving, and optimising catalogues by product details, pricing, suppliers, and SKUs. 

Effective catalogue management improves sales and CX. It also ensures accurate and up-to-date pricing, thereby streamlining the ordering process.

Why Is Effective Catalogue Management Important?

• It provides control over product information by ensuring accurate data flow across the entire retail or ecommerce chain.
• It creates uniformity in catalogues from various suppliers and distributors. It also helps in meeting specific requirements of diverse sales channels and marketplaces.
• It helps in organising data effectively.
• It showcases products and services for seamless user experiences. This helps boost sales as customers are able to easily access product information.
• It enables customers to quickly discover products. 

What Are The Challenges Of Product Catalogue Management?

• Brands have to constantly update their product listings, including product details, prices, and descriptions.
• Brands selling across multiple platforms have to manage multiple catalogues.
• Different channel requirements complicate updates. Additionally, all the listings have to be accurate.
• Managing complicated details means finding the right balance between being thorough and easy to understand so that simple product listings help people decide what to buy
• Maintaining good data quality is important but can be challenging. Inaccurate product listings make customers unhappy and if the information doesn’t match the product, it damages the brand’s reputation.

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What Is Influencer Marketing?

Influencer marketing is a strategic collaboration between brands and individuals who possess significant credibility and influence within a specific niche. These individuals, known as influencers, leverage their social media platforms and online presence to endorse products or services, effectively amplifying brand messages to their engaged audience.

According to a report, the Indian influencer industry is expected to grow at a CAGR of 25% through 2025, reaching INR 2,200 Cr. The influencer economy offers a lucrative opportunity for businesses to connect with their target customers. However, it is important to navigate the challenges and integrate influencer marketing into larger marketing campaigns for optimal results.  

What Is Social Media Influencer Marketing?

Social media influencer marketing is a subset of influencer marketing that involves partnering with influencers on platforms such as Instagram, Facebook, Twitter and YouTube. In India, where social media has witnessed exponential growth, social media marketing has become a prominent tool for reaching and engaging with diverse audiences.

What Are The Benefits Of Influencer Marketing?

• Authenticity & Trust: Influencers are seen as relatable and trustworthy figures by their followers, adding authenticity to brand endorsements.
• Targeted Reach: Collaborating with influencers allows brands to precisely target specific demographics or niche audiences.
• Enhanced Engagement: Influencers create content that resonates with their followers, resulting in higher engagement rates compared to traditional advertising.
• Cultural Relevance: In India’s culturally diverse landscape, influencers can tailor content to suit regional preferences, languages and trends.
• Boosting Sales And Conversions: Effective campaigns have the potential to drive significant sales and increase conversion rates.

 How Can Brands Create Influencer Marketing Campaigns?

• Objective And Audience Identification: Define clear campaign objectives and identify the target audience that aligns with your brand.
• Influencer Selection: Research and shortlist influencers whose content, values and audience match your brand’s ethos.
• Campaign Strategy And Collaboration: Develop a compelling campaign strategy, ensuring influencers have creative freedom while integrating your brand seamlessly.
• Content Creation: Collaborate closely with influencers to co-create content that authentically showcases your product or service.
• Disclosure And Transparency: Ensure influencers disclose their partnership with your brand transparently, adhering to legal and ethical guidelines.
• Amplification And Engagement: Promote influencer-generated content across your social media platforms, actively engaging with comments and feedback.
• Performance Analysis: Monitor key metrics such as engagement rates, reach and conversions. Analyse the campaign’s impact against predetermined goals.
• Long-Term Relationships: Cultivate lasting relationships with influencers who prove to be effective brand advocates, potentially leading to more impactful collaborations.

How Can D2C Brands Leverage Influencer Marketing To Expand Customer Base?

To broaden the customer base beyond Indian metros, D2C brands can strategically utilise micro and regional influencer marketing across various channels. On platforms like Instagram and Facebook, collaborating with micro-influencers can facilitate relatable product showcases, while partnering with regional influencers enables the creation of localised content that resonates with specific audiences.

• YouTube presents an opportunity to collaborate with micro-influencers for video reviews and tutorials, thereby reaching potential customers through engaging visual content. Additionally, engaging regional YouTubers can help establish a connection with local viewers, making the brand more relatable.
  
• Blogs and websites offer avenues for brand exposure through guest posts on regional blogs and sponsored content on micro influencers’ platforms. This approach aids in introducing the brand to new audiences and generating interest.
  
• For short-form video content, platforms like Moj, YouTube Shorts and Instagram Reels can be leveraged by creating snappy videos with micro-influencers. Aligning with regional trends and using local languages can significantly enhance the brand’s appeal.
  
• Podcasting provides another avenue for brand collaboration. By teaming up with regional podcast hosts, brands can have their products discussed and mentioned, effectively reaching a dedicated listener base.
  
• Local events and workshops, when organised in partnership with regional influencers, allow D2C brands to engage directly with potential customers in specific areas, fostering a more personalised connection.
  
• Incorporating influencer takeovers on platforms like Instagram Stories enables influencers to showcase the brand from their perspective, adding an authentic touch to the marketing strategy.
  
• Influencer giveaways and contests, organised in collaboration with micro-influencers, can enhance engagement and spread brand awareness organically among the target audience.
  
• Affiliate marketing programmes established with regional influencers can drive sales and create a mutually beneficial partnership, where influencers earn a commission for promoting the brand.
• Finally, exploring opportunities for features in regional publications through influencer partnerships can provide the brand with exposure in local magazines or newspapers, further amplifying its presence.

By strategically leveraging micro and regional influencer marketing across these channels, D2C brands can effectively expand their reach, resonating with diverse audiences across India beyond metropolitan areas.

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What Is  Ecommerce?

Ecommerce, an abbreviation for electronic commerce, refers to the buying and selling of goods and services over the internet. It involves every aspect of online transactions from browsing and choosing products to making payments and receiving delivery. Ecommerce has changed the way people conduct business by providing a single platform for brands and consumers to communicate and engage in commercial activities from anywhere in the world.

What Is An Ecommerce Business?

An ecommerce business, also known as an online business, is a business that operates and conducts the majority of its commercial activities via digital platforms. It utilises websites, mobile applications and other online channels to display products, process orders and facilitate transactions. These companies may sell physical commodities, digital goods, services or a combination of the three.

What Are The Different Types Of Ecommerce Models? 

• Business-To-Consumer (B2C) Ecommerce: This model involves businesses selling products or services directly to individual consumers. It is the most common form of ecommerce model. Some of the examples are Snapdeal, Flipkart, Paytm Mall and Purplle.   
• Business-To-Business (B2B) Ecommerce: It focusses on online transactions between businesses. This type of ecommerce involves companies that receive bulk orders of raw materials or office supplies online.
• Direct-To-Consumer (D2C) Ecommerce: It involves manufacturers or brands selling their products directly to consumers, bypassing traditional retail channels. D2C brands often leverage their online stores and digital marketing to build direct relationships with customers.
• Subscription Ecommerce: Subscription ecommerce offers products or services on a recurring basis. Customers subscribe to receive products regularly, usually on a monthly or weekly basis. Examples include subscription boxes and membership-based services. This model is particularly popular among D2C brands.
• Recommerce (Resale Ecommerce): Recommerce refers to the buying and selling of used or pre-owned products online. It has gained popularity due to the increasing demand for sustainable shopping options. Online marketplaces for recommerce allow individuals and businesses to sell second-hand goods.
• Roll Ups: The house of brands and ecommerce roll up concept is becoming increasingly popular in India  In the roll up model, a company acquires and invests in a number of smaller, independent brands. The goal is to create a portfolio of brands that can benefit from each other’s strengths and resources.
• Social Commerce: Social commerce integrates social media platforms with ecommerce. It allows users to discover and purchase products directly through social media networks. Social commerce relies on influencers, user-generated content, and personalised recommendations to drive sales.

What Are The Advantages And Disadvantages of Ecommerce?

Advantages of Ecommerce:

• Global Reach: Ecommerce transcends geographical boundaries, allowing businesses to reach customers worldwide without the need for physical stores at multiple locations.
• 24/7 Accessibility: Online stores are open 24/7, providing customers the convenience of shopping at their preferred time, increasing accessibility and potential sales.
• Lower Overhead Costs: Online businesses often have lower operational costs compared to brick-and-mortar stores, as they do not require physical storefronts or extensive staff.
• Data-Driven Insights: Platforms gather vast amounts of customer data, enabling businesses to analyse consumer behaviour and preferences to tailor marketing strategies.
• Wider Product Range: It allows businesses to offer an extensive range of products without the limitations of physical shelf space.

Disadvantages of Ecommerce:

• Lack Of Physical Interaction: Online shopping lacks the personal touch and physical interaction found in traditional retail, potentially affecting customer satisfaction.
• Security Concerns: Ecommerce transactions involve the exchange of sensitive personal and financial information, making security a major concern for both businesses and customers.
• Shipping And Delivery Challenges: Timely and reliable delivery is crucial in ecommerce, and issues such as shipping delays or damaged goods can impact customer satisfaction.
• Increased Competition: The ease of entry into the ecommerce market leads to high competition, making it challenging for businesses to differentiate themselves and gain a competitive edge.
• Technology Dependence: Ecommerce models demand heavy reliance on technology, and any technical glitches or server outages can disrupt business operations.

What Are The Differences Between Ecommerce and E-Business?

The terms “ecommerce” and “e-business” are often used interchangeably, but they have distinct meanings:

Ecommerce: Ecommerce specifically refers to the online buying and selling of goods and services. It focusses on the commercial aspect of business conducted through digital platforms.

E-Business: E-business, on the other hand, encompasses a broader scope of digital business activities. It includes not only ecommerce but also all other digital operations of a company such as online marketing, customer relationship management, and supply chain management.

In essence, ecommerce is a subset of e-business, with the latter encompassing a more comprehensive range of digital business functions.

What Are The Functions Of Ecommerce?

Ecommerce serves several essential functions that contribute to its success as a modern commercial platform:

• Online Product Catalogue: Ecommerce platforms showcase products and services with detailed descriptions, images, and specifications, enabling customers to make informed purchase decisions.
• Shopping Cart And Checkout: Ecommerce websites provide virtual shopping carts where customers can add products and proceed to secure online checkout, streamlining the purchasing process.
• Payment Processing: Ecommerce enables secure payment processing, supporting various payment methods like credit cards, digital wallets, and online banking.
• Order Fulfilment And Shipping: Businesses manage order fulfilment and shipping logistics to ensure the timely delivery of products to customers.
• Customer Service And Support: Ecommerce platforms offer customer service options such as live chat, email support, and knowledge bases to assist customers throughout their shopping journey.
• Analytics And Insights: Ecommerce platforms gather and analyse data on customer behaviour and purchasing patterns, helping businesses optimise their marketing and sales strategies.
• Marketing And Promotions: Ecommerce businesses utilise online marketing tactics such as social media marketing, email campaigns, and SEO to attract and retain customers.

What Are The Factors Driving Its Growth In India? 

The growth of ecommerce in India has been fuelled by several factors that have created a significant market opportunity and led to a rise in online shoppers. Here are some key factors driving the growth:

Increasing Internet Penetration: Driven by the widespread adoption of smartphones and affordable data plans, India has witnessed a substantial increase in internet penetration. According to a report, with 48.7% internet penetration, there were 692 Mn internet users in India at the start of 2023. 

Rapidly Growing Smartphone Usage: The availability of budget-friendly smartphones has led to a surge in smartphone usage across various demographics. With mobile devices becoming a primary means of accessing the internet, digital companies have adapted their platforms to be mobile-friendly, making it easier for consumers to shop online.

Digital Payments And E-wallets: The growth of digital payment options, including mobile wallets, UPI (Unified Payments Interface), and credit/debit cards, has facilitated seamless online transactions. The government’s push towards a cashless economy has also accelerated the adoption of digital payment methods.

Easier Access To Ecommerce Platforms: The proliferation of ecommerce marketplaces and online retailers has made it convenient for consumers to find and purchase products from a vast selection. Moreover, many platforms offer quick and reliable delivery services, enhancing the overall shopping experience.

Digital Marketing And Social Media Influence: Ecommerce companies invest heavily in digital marketing and social media advertising to reach a broader audience. Social media influencers and digital advertisements have a considerable impact on consumer choices, promoting ecommerce shopping.

Wide Product Assortment And Competitive Pricing: Ecommerce platforms offer a wide variety of products, including both local and international brands. The ability to compare prices easily and access discounts and deals has attracted a large number of cost-conscious consumers.

Urbanisation And Changing Consumer Behaviour: The ongoing urbanisation and changing lifestyle patterns have led to increased consumer preference for online shopping. Time-constrained urban dwellers find ecommerce convenient for their shopping needs.

Ecommerce Sales Events and Festive Offers: Ecommerce companies in India have leveraged various sales events such as Big Billion Days (Flipkart), Great Indian Festival (Amazon), and others, offering massive discounts during festive seasons. These events have become highly anticipated, driving a surge in online shopping during specific periods.

What Are The Main Challenges Faced By Retailers In Implementing An Effective Omnichannel Retail Strategy?

• Technology Integration: Integrating different systems and technologies across online and offline channels can be complex and costly. Many retailers struggle to synchronise inventory, customer data, and sales processes seamlessly.
• Data Management: Retailers need to manage large volumes of customer data from various touchpoints. Ensuring data accuracy, privacy, and security while using them to enhance customer experience is a significant challenge.
• Supply Chain Complexity: Fulfilling orders from multiple channels can strain the supply chain. Retailers must optimise inventory management and distribution to meet customer expectations for quick and efficient delivery.
• Organisational Silos: Often, different departments within a retail organisation work independently, leading to silos in operations and inconsistent customer experiences.
• Channel Conflict: Conflicts may arise between different sales channels, especially when it comes to pricing and promotions
• Consistent Branding: Maintaining a consistent brand identity and messaging across various channels can be difficult, impacting customers’ perception of the brand.
• Training And Workforce Adaptation: Ensuring that frontline employees are well-trained and adaptable to handle omnichannel customer interactions is crucial but challenging.

To overcome these hurdles, retailers can:

Invest In Unified Technology Platforms: Adopt integrated retail management systems that consolidate data and processes across channels. This will facilitate seamless communication between different touchpoints.

• Emphasise Customer Data Management: Implement robust data management and analytics tools to gather, analyse, and leverage customer data effectively. Personalisation based on customer insights can enhance the shopping experience.
• Streamline Supply Chain Operations: Optimise the supply chain to efficiently manage inventory and fulfil orders from multiple channels. Utilise technology like order management systems to coordinate inventory and fulfilment processes.
• Encourage Collaboration Across Departments: Break down organisational silos and encourage collaboration between departments to create a unified approach to customer service.
• Establish Clear Channel Roles: Define specific roles and responsibilities for each sales channel to avoid conflicts and ensure a harmonious customer journey.
• Consistent Branding And Messaging: Create brand guidelines and ensure that branding and messaging are consistent across all channels, reinforcing the brand’s identity.
• Invest in Employee Training: Train employees to be proficient in omnichannel retailing, ensuring they can assist customers across various touchpoints and deliver a consistent experience.
• Measure and Optimise Performance: Continuously monitor customer feedback, sales data, and key performance indicators to identify areas for improvement and optimise the omnichannel strategy.

What Are Some Of The Key Trends Shaping The Indian Ecommerce Sector?

M-Commerce: With the increasing proliferation of smartphones and mobile internet, m-commerce has become a dominant trend in the Indian ecommerce space. Consumers are progressively utilising mobile applications for online shopping, resulting in the development of mobile-first ecommerce platforms and improved user experiences.

Hyperlocal Ecommerce: Models for hyperlocal ecommerce have grown in popularity, especially for foodstuffs and essentials. These platforms connect local vendors with consumers to expedite and improve the dispatch of goods within a specific geographical area.

Individualisation & AI-powered Recommendations: The use of AI and ML by ecommerce companies to provide personalised purchasing experiences is playing a key role in shaping the present and future of this lucrative space in the country. Advanced recommendation engines analyse customer behaviour to provide product recommendations, resulting in increased customer engagement and conversions.

Omnichannel Retail: The integration of offline and online channels is a developing trend in Indian ecommerce, referred to as omnichannel retail. Numerous traditional retailers are employing omnichannel strategies, enabling customers to shop online and pick up their purchases from nearby brick-and-mortar stores, thereby delivering a seamless purchasing experience.

Cross Border Retail: The global cross-border ecommerce market size is expected to reach $5.9 Tn by 2030, growing at a CAGR of 25%. This growth is being driven by a number of factors, including the rise of online shopping, the increasing affordability of cross-border shipping, and the growing popularity of D2C brands.

How Have Government Initiatives Boosted SMEs’ Presence And Growth In Online Retail?

Digital India: The Indian government’s Digital India initiative seeks to transform the nation into a digitally empowered society and knowledge-based economy. It encourages the adoption of digital technologies, such as ecommerce, to enhance access to services and stimulate economic development.

Startup India: The Startup India initiative promotes entrepreneurship and aids enterprises in multiple industries, including ecommerce. It provides advantages such as simpler business registration, access to funding, and tax incentives to promote the development of ecommerce firms and small and medium-sized enterprises.

A Simplified Tax Regime: The implementation of Goods and Services Tax (GST) has simplified the tax structure for ecommerce enterprises. The GST regime has replaced multiple state and central taxes with a single unified tax, simplifying compliance for ecommerce businesses.

National Digital Commerce Policy (Draught): The Indian government has been developing a National Digital Commerce Policy to regulate the ecommerce sector, promote equitable competition, safeguard consumer interests, and foster the development of domestic enterprises.

Marketplace Platforms: Ecommerce marketplaces such as Flipkart, Amazon, and others provide a platform for small and medium-sized enterprises (SMEs) to offer their products online without significant infrastructure or marketing investments.

Logistics And Fulfilment Services: Third-party logistics and fulfilment service providers allow small and medium-sized enterprises to outsource warehousing, packaging, and delivery, thereby reducing operational costs and enhancing efficiency.

Digital Payments: The availability of multiple digital payment options has made it simpler for SMBs to accept online payments from customers, thereby eliminating the need for cash-on-delivery and enhancing cash flow.

Access To A Larger Customer Base: Ecommerce enables SMBs to reach customers beyond their local geographic borders, thereby expanding their market reach and growth potential.

Data Analytics And Marketing Tools: Ecommerce platforms offer access to data analytics and marketing tools that assist SMBs in comprehending consumer behaviour, optimising marketing campaigns, and enhancing product offerings.

Training And Assistance: Ecommerce companies and government initiatives frequently offer training, seminars, and resources to help SMBs better comprehend and navigate the online retail landscape.

The post Here’s Everything You Need To Know About Ecommerce appeared first on Inc42 Media.

What Is Churn Rate?

The churn rate is a critical metric that evaluates how well a brand retains its customers. It represents the percentage of customers who stop making purchases or using a brand’s products or services over a given period. For D2C companies, understanding the churn rate is vital, as retaining existing customers can be more cost-effective than acquiring new ones.

How To Calculate Churn Rate?

Calculating the churn rate for D2C brands is straightforward. To determine the churn rate for a specific period, use the following formula:

Churn Rate = (Number of Customers Lost in the Period / Total Number of Customers at the Start of the Period) * 100

For example, if a D2C brand had 10,000 customers at the beginning of the quarter and lost 500 customers during that period, the churn rate would be:

Churn Rate = (500 / 10,000) * 100 = 5%

How Is Churn Rate Different From Growth Rate?

• Churn Rate: The churn rate, also known as the customer attrition rate, is the percentage of customers who stop using a product or service during a specific period. It measures the rate at which customers discontinue their relationship with a company or brand. A higher churn rate indicates a higher rate of customer loss, which can have a negative impact on a business. 

Example of Churn Rate: The churn rate represents the percentage of subscribers who cancel their subscriptions within a specific period. Let’s say that in a given month, a company had 500 subscribers at the beginning of the month. During that same month, 50 subscribers decided to cancel their subscriptions. The churn rate for that month would be (50 / 500) * 100 = 10%. This means that 10% of the initial subscribers churned or cancelled their subscriptions during that month.

• Growth Rate: Growth rate, on the other hand, measures the increase in a company’s revenue, customer base, or market share over a given period. It is an indicator of business expansion and success. A positive growth rate suggests that the company is acquiring new customers or generating more revenue at a faster pace than the churn rate.

Example of Growth Rate: Consider an ecommerce platform in India that had 2 Mn active customers at the beginning of the year. By the end of the year, they successfully acquired 5,00,000 new customers, increasing their customer base to 2.5 Mn. To calculate the growth rate:

Growth Rate = ((2.5 million – 2 million) / 2 million) * 100 = 25%

In this example, the growth rate for the ecommerce platform is 25%, indicating a significant increase in their customer base over the course of the year.

What Are Different Benchmarks For Churn Rate?

Benchmarks for churn rate among D2C brands can vary depending on factors such as industry, business model and product type. For subscription-based D2C companies like Zomato Gold, Licious, The Man Company, Cure.fit, etc., a lower churn rate is typically expected due to the recurring revenue model. On the other hand, one-time purchase D2C brands may experience higher churn rates.

As a rough guideline, a churn rate below 5% is often considered excellent for D2C companies. However, it’s crucial to compare the churn rate with industry benchmarks to gain a more accurate understanding of how well a brand is retaining customers.

How To Improve Churn Rate For Your D2C Business?

Improving the churn rate is essential for the long-term success of D2C brands. Here are some strategies to enhance customer retention:

1. Personalised Customer Experience: Leverage customer data to understand individual preferences and offer personalised recommendations. Tailoring the shopping experience to customers’ needs can increase loyalty.
2. Proactive Customer Support: Provide excellent customer support to address issues and concerns promptly. Engaging with customers before problems escalate can lead to higher satisfaction and retention.

The post Here’s Everything You Need To Know About Churn Rate appeared first on Inc42 Media.

What Is An Omnichannel Model?

The omnichannel model refers to a marketing or retail strategy, which is often employed by direct-to-consumer (D2C) brands to provide a unified and seamless consumer experience across multiple channels and touchpoints.

Under an omnichannel strategy, brands strive to offer consistent and unified experiences to customers, regardless of whether they interact with the brand via online or offline channels.

In today’s digital-first world, a well-thought-out omnichannel retail strategy is essential for D2C brands. This is because customers increasingly prefer a unified shopping experience that allows them to seamlessly move between online and offline channels.

A comprehensive omnichannel strategy consists of physical locations, ecommerce websites, mobile applications, social media platforms and even call centres. The objective behind such a strategy is to provide consumers with personalised and connected experiences regardless of the channel they choose to interact with the business.

What Are The Key Growth Drivers Of An Omnichannel Approach In Ecommerce?

• Rise In Disposable Income: According to Inc42, India’s consumption expenditure is projected to double from $1.5 Tn in 2020 to $3 Tn by 2030, driven by the rise in disposable income across the country, including in rural areas. The growth of the ecommerce industry will be fuelled by D2C brands that have an omnichannel presence.
• Convergence Of Offline & Online Verticals Across Sectors: D2C brands in the fashion and lifestyle sectors were the first to embrace omnichannel retail within ecommerce. However, the rise of multiple delivery models, such as quick commerce, has allowed other sectors like food and groceries to opt for this approach.
  
• Crucial For Trust Building: Indian consumers still prefer to touch and feel products before making a purchase. As a result, D2C brands need to combine online and offline channels to create a hybrid shopping experience to meet the needs of their customers.
• Competing With Legacy Brands: Large legacy retailers like Tata and Reliance have been increasing their digital presence across channels. This has led to omnichannel becoming a necessity for D2C brands to compete with these behemoths.

What Are The Examples Of Omnichannel Retailing?

• Online-to-Offline (O2O) Integration: D2C brands may have an online presence where customers can not only purchase products but also establish physical stores or pop-up shops to provide customers with hands-on experience, test products and get in-person assistance.
• Mobile Apps: brands launch their mobile apps that enable customers to shop, monitor orders, receive personalised recommendations and remain up-to-date on the latest promotions, creating a direct and personalised engagement channel.
• Social Media And Influencer Marketing: Using social media platforms, D2C brands engage with their audience, conduct targeted advertising and collaborate with influencers to reach potential consumers where they are already spending time.
• Personalised Email Marketing: D2C brands send customised email campaigns to consumers based on their preferences and behaviour, thereby personalising purchasing experience and encouraging repeat purchases.

What Is Omnichannel Distribution?

In the retail supply chain, omnichannel distribution refers to the synchronised administration of inventory and order fulfilment across multiple channels. Omnichannel distribution facilitates the flow of products from suppliers to consumers through all available sales channels, including physical stores, distribution centres and online marketplaces, as opposed to treating each channel as a separate entity.

Ecommerce companies and retail titans in India have adopted omnichannel distribution to efficiently meet consumer demands. With an integrated system, retailers can optimise their inventory. This helps reduce out-of-stock situations and ensures quick and more dependable customer deliveries.

In addition, utilising multiple distribution channels enables retailers to offer more adaptable delivery alternatives, such as ‘click-and-collect’ or ‘ship-from-store’, thereby accommodating a variety of customer preferences.

The post Here’s Everything You Need To Know About Omnichannel Strategy appeared first on Inc42 Media.

What Is A Fulfilment Centre?

A fulfilment centre is a strategically located warehouse designed to manage and process the inventory of ecommerce businesses. It serves as the hub where products are stored, packed, picked, and shipped to customers once an order is placed. Fulfilment centres are equipped with advanced technology and logistics systems to optimise the entire supply chain process from order intake to final delivery.

What Is An Amazon Fulfilment Centre?

Ecommerce behemoth Amazon has played a pivotal role in redefining the concept of fulfilment centres. Amazon Fulfilment Centres are massive warehouses that are strategically located around the world. These centres house a diverse range of products from various sellers. Once a product is received at an Amazon Fulfilment Centre, it becomes part of Amazon’s inventory and is eligible for Amazon Prime and other fulfilment services.

What Is A Flipkart Fulfilment Centre?

Flipkart, one of India’s leading ecommerce platforms, has also adopted the fulfilment centre model to enhance its operational efficiency. Flipkart Fulfilment Centres function similarly to Amazon’s, offering services like storage, order processing, and shipment handling. Sellers partnering with Flipkart can store their products at these centres and leverage Flipkart’s logistics network for timely deliveries.

How Do Amazon Fulfilment Centres Work?

Amazon Fulfilment Centres operate with a seamless blend of technology and human intervention to ensure efficient order fulfilment. Here’s how they work:

• Inventory Receipt: Products from various sellers are sent to Amazon Fulfilment Centers, where they are carefully catalogued, labelled, and stored in designated sections.
• Product Storage: Products are organised within the fulfilment centres based on factors like size, weight, and demand. This optimisation allows for easy retrieval during order processing.
• Order Placement: When a customer places an order on Amazon, the nearest or most suitable fulfilment centre is chosen to fulfil the order.
• Picking: Upon receiving an order, Amazon’s system directs a picker to locate the ordered product. This process is often guided by sophisticated software that optimises the route to minimise picking time.
• Packing: Once the product is picked, it moves to the packing station. Here, it is carefully packaged using appropriate materials to ensure safe transit.
• Shipping: After packing, the order is labelled with the customer’s address and is ready for shipping. Amazon’s vast logistics network takes over to ensure the order reaches the customer within the promised timeframe.
  

Advantages:

• Efficiency: Fulfilment centres are equipped with automation and efficient processes, reducing the time between order placement and delivery.
• Scalability: Ecommerce businesses can easily scale their operations by leveraging the storage and processing capabilities of fulfilment centres.
• Focus On Core Activities: By outsourcing the logistics and order processing aspects, businesses can focus more on product quality, marketing, and customer engagement.
• Global Reach: Fulfilment centres strategically placed around the world enable businesses to reach a global customer base.
• Reduced Shipping Costs: Fulfilment centres allow for bulk shipping, reducing individual shipping costs and making products more affordable for customers.

A Look At The Challenges And Future Trends

While fulfilment centres offer numerous benefits, they also come with challenges. Ensuring accurate inventory management, maintaining product quality, and managing the complexities of returns are some of the hurdles that businesses must navigate.

Looking ahead, the future of fulfilment centres is likely to involve even more advanced automation. Technologies like robotics and AI could further streamline the picking and packing processes, leading to increased efficiency and reduced operational costs.

The post Here’s Everything You Need To Know About Fulfilment Centre appeared first on Inc42 Media.

What Is Average Order Value?

Average order value (AOV) is a fundamental metric that quantifies the average monetary value of each customer order in an ecommerce store or retail establishment. Simply put, it represents the average amount spent by a customer per transaction. Understanding AOV provides businesses with valuable insights into customer spending behaviour, which can influence marketing strategies and revenue optimisation.

How Is Average Order Value Calculated?

Calculating AOV is straightforward and can be determined using the following formula:

AOV = Total Revenue Generated / Number of Orders

For example, if an online store records a total revenue of INR 1 Lakh from 2,000 orders in a given period, the AOV would be INR 50.

Why Is AOV Important for Businesses? Can It Vary?

Average order value holds significant importance for businesses for the following reasons:

• Revenue Prediction: AOV serves as a reliable predictor of potential revenue. By knowing the average value of each order, businesses can estimate their overall revenue based on projected sales volume.
• Marketing Effectiveness: AOV provides insights into the effectiveness of marketing campaigns and sales strategies. A higher AOV indicates successful upselling and cross-selling efforts, leading to increased revenue per customer.
• Profitability Assessment: AOV is directly linked to profitability. Businesses can identify products or services with a high AOV that contribute significantly to the overall profit margins.
• Customer Segmentation: By segmenting customers based on their AOV, businesses can tailor targeted marketing strategies for different customer groups. High-AOV customers may require different messaging and incentives than low-AOV customers.
• Pricing Strategy: Insights from AOV can assist in devising pricing strategies and maximising revenue without impacting customer satisfaction. It helps businesses strike the right balance between offering value and generating revenue.

However, average order value can vary significantly across industries and business models. 

• Fashion Retail: Fashion ecommerce stores may have a relatively lower AOV due to frequent purchases of lower-priced items like clothing and accessories.
• Electronics And Gadgets: AOV in the electronics industry tends to be higher as customers spend on relatively costlier items such as smartphones, laptops, and gadgets.
• Luxury Brands: Luxury brands typically have a higher AOV as their products command premium prices and appeal to high-end customers.
• Subscription Services: Subscription-based businesses often have a stable and predictable AOV due to recurring payments from loyal customers.

How To Improve AOV?

Increasing AOV is a strategic goal for businesses seeking to boost revenue and profitability. Here are some effective ways to improve the average order value:

• Upselling And Cross-Selling: Implement intelligent product recommendations to upsell higher-priced items or cross-sell complementary products during the checkout process. Highlight the value proposition to entice customers into making additional purchases.
• Bundle Deals And Discounts: Offer attractive product bundles with discounted pricing to encourage customers to add more items to their cart. Bundle deals create perceived value and incentivise customers to buy multiple products together.
• Free Shipping Thresholds: Set a minimum order value for free shipping to motivate customers to add more products to reach the threshold. Free shipping offers are known to increase AOV as customers strive to avoid shipping costs.
• Limited-Time Offers: Display time-sensitive offers on the cart page to create a sense of urgency and prompt customers to buy more before the offer expires. Limited-time deals can lead to immediate purchase decisions.
• Personalisation: Utilise customer data to personalise product recommendations and offers. Tailored recommendations based on past purchases and browsing behaviour can lead to larger cart sizes.

What Are the Advantages And Disadvantages Of Using AOV As A Metric?

What Are Some Of The Different Types Of Metrics Related To AOV?

While AOV is an essential metric, businesses should consider other related metrics to gain a holistic view of their performance. Some of these metrics include:

• Customer Lifetime Value (CLV): CLV calculates the total revenue a customer generates over their entire relationship with the business, helping to understand long-term customer worth.
• Conversion Rate: Conversion Rate measures the percentage of website visitors who complete a desired action, such as making a purchase. It complements AOV by providing insights into website performance and user engagement.
• Shopping Cart Abandonment Rate: This metric tracks the percentage of customers who add items to their cart but do not complete the purchase. Addressing cart abandonment issues can impact AOV positively.
• Average Revenue Per User (ARPU): ARPU calculates the average revenue generated per individual user or customer. For subscription-based businesses, ARPU complements AOV in evaluating revenue streams.

The post Here’s Everything You Need To Know About Average Order Value appeared first on Inc42 Media.

What Is Inventory Management?

Inventory management is the core of supply chain management, comprising all processes necessary to trace inventory levels, monitor stock movements, and efficiently fulfil customer orders. The primary objective is to maintain optimal inventory levels in line with current and projected consumer demand. By achieving this equilibrium, businesses can avoid the costly repercussions of overstocking or running out of stock, both of which can have detrimental effects on profitability and customer satisfaction.

What Is Lead Time?

Lead time is the duration between the placement of an order and the receipt of the products. It is a crucial aspect of inventory management because it directly influences the planning and execution of replenishment. Lead time includes order processing, production or procurement, transportation, and any potential supply chain delays.

Understanding lead time is essential because it allows businesses to anticipate the amount of time required to replenish inventory and plan accordingly to avoid stockouts.

What Is An Inventory Management System?

Inventory management systems help businesses to efficiently monitor, control, and optimise inventory. Utilising technology, these systems provide real-time information on stock levels, sales trends, and order status. The systems play a crucial role in augmenting accuracy, streamlining operations, reducing costs, and boosting overall productivity.

Which Software Is Recommended In Inventory Management?

Several software solutions offer distinct features and cater to businesses of varying sizes and industries. The choice of software largely depends on the specific needs and scale of the company. Some of the highly recommended inventory management software includes:

• Inventory Management Modules In ERP Systems: Enterprise Resource Planning (ERP) systems, such as SAP, Oracle ERP, and Microsoft Dynamics 365, often come with integrated inventory management modules. These solutions offer comprehensive features and seamless integration with other business processes.
• Independent Inventory Management Software: Dedicated inventory management software like Fishbowl, TradeGecko, and Zoho Inventory are designed specifically to handle inventory-related tasks efficiently. These solutions are often user-friendly and cost-effective for smaller businesses.
• Cloud-Based Inventory Management Systems: Cloud-based solutions, including inFlow and DEAR Inventory, provide the advantage of real-time accessibility, allowing businesses to manage inventory data from anywhere with an internet connection.
• Point Of Sale (POS) Systems With Inventory Management Features: Some POS systems, such as Square and Vend, offer integrated inventory management features, which can be beneficial for businesses operating both online and offline.

How To Improve Inventory Management?

Improving inventory management is a continuous process that involves implementing best practices and utilising modern techniques to enhance overall efficiency. Here are some strategies:

• ABC Analysis: Implement ABC analysis to classify inventory items based on their value and prioritise management efforts. Focus on high-value items (A items) to optimise stock levels and improve customer satisfaction.
• Just-In-Time (JIT) Inventory Management: Adopt a JIT approach to reduce holding costs by ordering inventory only when it is needed. JIT helps minimise excess stock and the associated carrying costs.
• Demand Forecasting And Planning: Utilise historical sales data, market trends, and customer feedback to forecast future demand accurately. This proactive approach ensures that inventory levels align with actual customer requirements.
• Automate Inventory Management: Leverage inventory management software to automate tasks such as stock tracking, order processing, and reporting. Automation improves accuracy, saves time and reduces the chances of human error.
• Optimise Reorder Points And Safety Stock: Set appropriate reorder points and safety stock levels based on lead time and demand variability. This ensures that inventory is replenished before running out while avoiding excessive stockpiling.
• Implement Inventory Techniques: Utilise inventory techniques such as First-In-First-Out (FIFO) or Last-In-First-Out (LIFO) to manage inventory based on product characteristics and industry standards.
• Collaborate With Suppliers: Establish strong and transparent relationships with suppliers to negotiate favourable terms, faster lead times, and reliable supply, leading to smoother management.

What Are The Objectives Of Inventory Management?

The objectives of inventory management encompass a range of strategic and operational goals, all aimed at optimising inventory levels and improving overall efficiency. Some key objectives include:

• Optimal Stock Levels: Ensure that inventory levels are well-balanced to meet customer demand while minimising holding costs.
• Customer Satisfaction: Satisfy customer needs promptly by maintaining sufficient inventory to fulfil orders promptly and avoid stockouts.
• Cost Efficiency: Minimise inventory carrying costs, storage expenses, and potential losses due to obsolescence or spoilage.
• Supply Chain Optimisation: Streamline the flow of goods through the supply chain to reduce lead times and improve overall efficiency.
• Working Capital Management: Optimise inventory levels to release tied-up working capital for other business investments.
• Inventory Turnover Improvement: Increase inventory turnover ratio to enhance cash flow and maximise profitability.

How D2C Brands Handle Fluctuating Demand With Smart Inventory Management Practices?

Handling fluctuating demand with smart inventory management practices is crucial for businesses to optimise their operations, minimise costs, and meet customer expectations. Here are some strategies for D2C brands effectively manage inventory during periods of fluctuating demand:

• Real-Time Data And Analytics: Implement a system for inventory management that provides real-time data on inventory levels, sales trends, and demand forecasts. Based on precise data, advanced analytics can help you make informed decisions.
• Demand Forecasting: Use historical sales data and market trends to forecast demand. This will help you anticipate spikes or drops in demand and adjust your inventory levels accordingly.
• Safety Stock: Maintain a safety stock of essential items to accommodate sudden spikes in demand or unexpected interruptions in the supply chain. Safety stock functions as a cushion and ensures that orders can be fulfilled even during peak demand periods.
• Supplier relationships: Develop strong connections with suppliers and negotiate flexible agreements. This enables you to rapidly gain access to additional inventory during periods of high demand and to negotiate better pricing.
• Dropshipping And Just-in-Time (JIT) Inventory: Consider dropshipping for certain products, where suppliers directly ship products to customers. JIT inventory ensures you receive stock just in time to meet demand, reducing the need for large on-hand inventories.
• Segmented Inventory Management: Categorise products based on demand patterns and prioritise inventory management accordingly. Items with a high demand may require more frequent replenishment and monitoring.
• Dynamic Pricing: Implement dynamic pricing strategies to modify product prices according to demand levels. This can assist in balancing supply and demand and optimising revenue amidst market fluctuations.
• Automation And Robotics: Utilise automation and robotics in your warehouses to improve order processing efficiency and reduce fulfilment times during peak periods.
• Collaborative Planning: Develop coordinated demand and supply plans with other stakeholders, such as suppliers and distributors. This can result in a more responsive and efficient supply chain.
• Communication With Customers: Keep customers informed about stock availability and potential delays during periods of high demand. Transparent communication fosters consumer confidence and helps to manage their expectations.
• Promotions And Bundling: During low-demand periods, consider offering promotions, discounts, or product bundles to stimulate sales and clear excess inventory.
• Continuous Improvement: Regularly evaluate and refine your inventory management strategies based on historical data and performance metrics. Continuously improving your processes will help you handle future fluctuations more effectively.
• What To Consider While Choosing To Outsource Warehousing To Logistics Players? 

Whether to outsource warehousing or not depends on various factors, such as:

• Cost Savings: Outsourcing warehousing can be cost-effective, especially for small and medium-sized ecommerce businesses. It eliminates the need to invest in infrastructure, technology, and personnel required for operating an in-house warehouse.
• Flexibility And Scalability: Warehousing providers offer flexible solutions that can adapt to your changing inventory needs. As your business grows, you can easily scale up or scale down your warehousing requirements without major disruptions.
• Expertise And Specialisation: Logistics players specialising in warehousing have expertise in managing inventory efficiently. They use advanced inventory management systems and best practices to optimise storage, picking, and packing processes.
• Focus On Core Competencies: Outsourcing warehousing allows you to focus on your core business activities such as marketing, product development, and customer service, without being burdened by the complexities of warehousing operations.
• Geographical Reach: If your ecommerce business caters to customers in different regions or countries, partnering with a warehousing provider with a wide geographical reach can help you ensure faster and more cost-effective order fulfilment.

When Not To Outsource Warehousing:

• Control And Visibility: Maintaining an in-house warehouse gives you more control and visibility over your inventory. You can directly monitor stock levels, quality control, and order fulfilment processes.
• Unique Requirements: If your ecommerce business deals with specialised or unique products that require specific handling or storage conditions, an in-house warehouse may be better suited to meet those requirements.
• Brand Identity: In-house warehousing allows you to maintain a consistent brand identity throughout the entire fulfilment process, ensuring that your customers’ experience aligns with your brand values.
• Data Security And Privacy: If your inventory includes sensitive customer data or proprietary information, keeping it in-house may provide an extra layer of data security and privacy.

Whom Can You Partner With To Manage Your Inventory Efficiently?

Several logistics players offer warehousing and inventory management services tailored to the needs of ecommerce businesses. These players include:

• Third-Party Logistics (3PL) Providers: 3PL companies specialise in warehousing, transportation, and distribution. They offer end-to-end logistics solutions, including inventory management, order fulfilment, and last-mile delivery.
• Fulfilment Centres: Fulfilment centres are specialised warehouses that handle order processing, packaging, and shipping on behalf of ecommerce businesses. They can integrate with your online store and manage your entire fulfilment process.
• Transportation And Freight Forwarding Companies: These players provide transportation services, including the movement of goods from manufacturers or suppliers to warehouses and from warehouses to end customers.
• Inventory Management Software Providers: Some logistics technology companies offer cloud-based inventory management systems that help ecommerce businesses track and manage their inventory in real time.
• Global Warehousing Networks: Some logistics players have a global network of warehouses strategically located in different regions to enable faster and more cost-effective international order fulfilment.

The post Here’s Everything You Need To Know About Inventory Management appeared first on Inc42 Media.

What Is Affiliate Marketing?

Affiliate marketing is a form of performance-based marketing where individuals or businesses promote the products or services of companies. Ecommerce major Amazon is credited for popularising affiliate marketing in online shopping. It did so by enabling bloggers and websites to put links to Amazon’s page for products they review or talk about. When someone buys a product through these links, websites and bloggers get paid.

Affiliate marketing is essentially like outsourcing the selling process to a big network of people who get rewarded when they make sales.

How Do Affiliate Marketers Earn Money?

The following steps and stakeholders are involved in affiliate marketing:

Advertiser/Merchant: This is often used for a company or business looking to leverage affiliate marketing. Advertisers create affiliate programmes to promote products and services.

Affiliate Marketers: These are the Individuals or entities who join an advertiser’s affiliate programme to promote products, services and solutions. Affiliate marketers do this by using various channels such as websites, blogs, social media platforms and emails. These affiliates drive traffic to business websites by encouraging customers to make a purchase.

An affiliate prompts the customer to click on the ‘call to action’ button in order to drive traffic and encourages customers to make purchases on the business’ website. Every time a customer makes a purchase, the affiliate earns a commission. The specific terms of this arrangement, including commission rates and cookie durations (the time period in which the affiliate can earn a commission after the initial click), are defined by advertisers.

What Are The Different Types Of Affiliate Marketing Models?

There are three main types of affiliate marketing models:

Unattached: In this model, an affiliate has no connection to the product or service they are promoting or possesses any related skill or expertise. The affiliate usually runs PPC (pay-per-click) marketing campaigns, using an affiliate link in the hope that shoppers will click it. 

Related: This model involves the promotion of products or services by affiliates who hold relevant skills and expertise in the products or services they are promoting. 

Involved: As the name suggests, affiliates are more involved in the marketing process. It means that they are either currently using the product or are confident about its impact. These affiliates might share experience in using a product or service, thus garnering more trust from potential consumers.  

What Are The Advantages & Disadvantages Of Affiliate Marketing?

For D2C brands, affiliate marketing presents an array of benefits. However, there are also some demerits.

Let’s look at each of them: 

Advantages of Affiliate Marketing:

• Cost Optimisation: D2C brands need to pay affiliates only when they successfully generate a lead or sale. This can be more cost-effective than traditional advertising.
• Enhanced Reach: By creating a vast network of affiliates, brands can tap into a wider audience and reach potential customers who may not have otherwise discovered their products or services.
• Targeted Marketing: Brands can tap into bloggers and websites with niche-specific audiences, allowing them to reach their target audience more effectively. 
• Brand Exposure: As affiliates promote products or services, brands gain exposure to various platforms and websites, leading to brand awareness.

Disadvantages of Affiliate Marketing:

• Affiliate Onboarding & Management: Managing a vast network of affiliates requires time and effort. It can be challenging to find reliable affiliates, and even more challenging to ensure that they promote products ethically and as per the guideline laid down by a brand.
• Commission Fees: Giving a percentage of each sale to affiliates can eat into profit margins.
• Brand Representation: Affiliates are independent and any adverse action can reflect poorly on the brand. 
• Frauds & Dishonest Practices: If affiliates engage in practices such as cookie stuffing or use misleading marketing techniques, the brand’s image may get compromised. 

What Are Some Prominent Affiliate Marketing Programmes In India? 

There are several dedicated platforms for affiliate marketing like Flickstree and Vcommissions. However, big shots like Flipkart, Amazon and website builder Shopify also run their own affiliate marketing programmes. 

Interestingly, high-growth startups in India have also jumped on the affiliate programme bandwagon. Brands like WOW Skin Science and Nykaa have their own programmes. 

What Are The Best Practices For Affiliate Marketing?

Having a well-thought marketing strategy in place can help D2C brands create successful affiliate programmes. Some strategies include: 

• Choosing Right Affiliates: Select affiliates who align with your brand’s values, niche, and target audience.
• Offer Competitive Commission Rates: Attractive commissions can attract top-performing affiliates and encourage them to get leads. 
• Set Guidelines That Align With Your Brand: Outline the dos and don’ts of your affiliate programme and state how affiliates should promote products keeping the brand’s image on priority.
• Monitor Performance: Regularly track the performance of affiliates to identify top performers. Use tracking tools and analytics to measure click-through rates, conversion rates and other metrics.
• Communicate Effectively: Establish transparent communication with your affiliates, respond to their inquiries promptly and offer support when needed.
• Exclusive Incentives: Provide exclusive offers, discounts or freebies to your affiliates’ audiences. This can motivate their followers to make purchases.
• Reward Top-Performing Affiliates: Rewarding affiliates, especially bloggers, encourages them to continue promoting your brand and fosters a sense of trust. 
• Manage Frauds: Regularly review affiliate activities to detect fraud. Implement fraud detection tools and establish clear policies with your affiliates. 

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What Is Direct To Consumer (D2C)?

The D2C model has gained immense popularity over the last few years, offering businesses a means to eliminate intermediaries, gain a closer understanding of market dynamics and directly sell their products to consumers. 

D2C brands leverage their own websites in order to create strong consumer relations, gain more control over the customer experience and ensure lasting customer retention. 

In India, there are more than 50K digital-first brands today. 

What Are The Benefits Of D2C Over Traditional Retail Channels? 

Following are some of the advantages of going D2C:

Direct Interactions: Traditional retailers generally rely on market research and surveys to understand consumer sentiment and preferences. However, the D2C model lets businesses engage directly with customers at every stage, helping them gain valuable insights to enhance the shopping experience and subsequently increase market share.

Reduced Time To Market: A consumer packaged goods (CPG) brand will need 18-36 months from inception for its products to reach the stores due to multiple stakeholders and approvals involved in the process. However, for a D2C brand, it is as easy as setting an Instagram account and listing one’s WhatsApp business number to start the business. Starting small allows D2C brands to devise a quick growth plan before going full throttle. 

Creating A Brand Identity: In traditional retail, a brand’s control is often limited to its packaging and outbound marketing efforts. Consequently, this can lead to the brand getting lost amid a sea of options, especially when it’s a new and emerging one. The D2C route allows brands greater control over product packaging, marketing messages, managing deliveries and curating post-purchase experience.  

Multiple Integrated Sales Channel: Besides leveraging their own websites, D2C brands can list themselves on various marketplaces to gain more visibility and acquire a larger customer base. In addition, enablers, including martech platforms and website builders, equip online brands with customer and business insights that help them improve their market performance.

What Is The State Of D2C Brands In India Today?

India’s D2C market opportunity is growing at a fast clip. According to Inc42’s estimates, D2C brands raised more than $925 Mn funding in H1 2023 — out of this, Lenskart bagged a whopping $700 Mn in funding from marquee investors like AIDA and ChrysCapital.

The D2C market is expected to account for 75% or $300 Bn of ecommerce’ $400 Bn market opportunity by 2030, making it the largest and fastest-growing segment within the ecommerce landscape. 

Several factors are responsible for the hyper-growth trajectory of the D2C market. Today, India has the third-largest online shopping base in the world, after the US and China, giving impetus to the growing D2C market. The rising internet penetration has also empowered shoppers beyond the metros, making online retail even more accessible. 

As many D2C brands have already made a dent in the Indian market, they are now dipping their toes into the cross-border opportunity which is being considered as the next big growth driver for India’s D2C brands. 

When Should D2C Brands Take The Offline Route? 

Over the years, brands have evolved their sales strategy, shifting from pure-play D2C (read leveraging their own websites) to omnichannel giants with a presence across websites, marketplaces and offline retail stores. SUGAR Cosmetics, Mamaearth and Lenskart are some of the prominent D2C brands that have perfected the omnichannel approach. 

However, brands should consider the following parameters before taking the offline plunge:

• Shelf Life: Offline retail works better for products with a longer shelf life. Offline retail can make the distribution process longer. Hence, it may not be beneficial for fresh foods and perishable goods. 
• Understanding The Category: The share of ecommerce in some of the sectors such as electronics, apparel, and beauty is already at 30-40%, allowing D2C startups in these segments to achieve significant growth without the need for a physical presence. However, D2C brands operating in categories with lower ecommerce penetration should first attain their product-market fit, establish brand loyalty and then expand offline. 

What Legal & Regulatory Considerations Do D2C Startups Need To Be Aware Of?

Following are some of the important legal and regulatory considerations for D2C startups:

Register Your Startup: To start a business in India, entrepreneurs must register the entity with the Registrar of Companies (RoC). The Companies Act 2013 and the Limited Liability Partnership (LLP) Act govern registrations. 

Obtain Necessary Licences: Startups may be required to obtain specific licences for specific businesses. Such licences are issued by several regulatory bodies including municipal corporations, the Food Safety & Standards Authority of India (FSSAI), the Directorate General of Foreign Trade (DGFT), the Department for Promotion of Industry and Internal Trade (DPIIT), among others. 

Legal Agreements: Before starting a business, some legal arrangements may be required with vendors, suppliers, customers and other stakeholders, such as vendor, service and employment agreements. Such agreements limit the liability and obligations of the business.

Tax Regulations: Besides obtaining a  PAN and a TAN card, startups are required to register for Goods & Services Tax (GST) if their turnover is more than INR 20 Lakh. 

Protecting Intellectual Property (IP): IPs can be protected under patents, trademarks and copyrights. The Controller General of Patents, Designs, and Trademarks grants these protections after verifying the application. 

Data Protection: It is important to create and foster consumer trust if a brand aims to corner long term success. Data protection is crucial in this regard as consumers can become vary of a brand if their privacy is threatened or compromised. Given the scenario, D2C brands must implement data protection measures and comply with data protection regulations like General Data Protection Regulation (GDPR) and Central Consumer Protection Authority (CCPA).  

What Are The Key Metrics That D2C Brands Should Track To Measure Their Success & Growth?

A few important metrics to measure growth are: 

• Customer Acquisition Cost (CAC): Being aware of how much expense is incurred on a customer allows brands to gauge the efficiency of marketing and advertising strategies, enabling them to make informed decisions regarding budget allocation.
• Customer Lifetime Value (CLTV): Understanding the CLTV is crucial as it enables brands to calculate the appropriate budget for customer acquisition and retention efforts. It also helps identify valuable customers who are worth investing in for sustained and long-term relationships.
• Monthly Recurring Revenue (MRR): MRR is a predictable metric of the recurring revenue of a business. It helps brands forecast their revenues and make informed decisions about the cash flows and budgeting.

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