Ecommerce in India: Will the Advertising Spend Pay Off?

The ecommerce sector in India saw a period of exponential growth from 2009 to 2015. While most of the initial growth in the sector was led by companies that provided online services, the growth of companies that sold physical goods to the customers started gaining momentum in the later years. The relatively smaller size of the sector in India when compared to its counterparts in developed countries meant that Indian ecommerce suffered from a lack of good brand recognition in the eyes of customers. Most companies relied on the model of selling goods at steep discounts to attract customers. However, the discounts made it difficult for the ecommerce companies to even recover their costs and most of them started incurring deep losses every year. Customers shopped with the company that offered the products at the cheapest price rather than staying loyal to any one of them. In order to cut their losses and improve customer loyalty, ecommerce companies started aggressive advertising campaigns to improve the image of their brands.