HomeShop18.com is Spending a Lot in August: But Why?

Credit: Shehjar.com

E-commerce has proven to be a lucrative business when executed properly. Success stories range from eBay and Amazon in the U.S to Alibaba Group’s dominance in China with Taobao.com. And in India, there are a couple of fast-growing e-commerce giants emerging too, namely Flipkart (books), SnapDeal (group-buy), and HomeShop18 (everything). As a fast growing Internet nation, it’s important to grab market share early. Everyone knows that. And these e-commerce companies are fighting to the death to grab whatever they can. HomeShop18.com has been particularly aggressive, especially this month.

How aggressive? First it acquired CoinJoos.com, an online book e-commerce site (but which is nowhere near Flipkart’s size); then it rolled out a new and refreshing logo; and third it initiated a TV advertising campaign (ka-ching for the ad industry). Anyone in big business knows that TV commercials are one of the biggest costs that one has to commit to make it successful. A newly-created thirty-second TVC could easily cost hundreds of thousand of dollars. Here’s HomeShop18’s new spot:

But why is HomeShop18 spending so much in August? Here’s what I think:

(1) Timing: The rest of the e-commerce boys in India aren’t spending on gaining reach – not yet, at least. So spending now seems logical because there isn’t a need to fight against the clutter. The ad’s tagline says it all: “Homeshop18, India’s largest e-commerce company.” And the quietness of the rest amplifies that message. What of its rivals? With a new $20 million injection, Flipkart is probably going to spend some on advertising. Would it be a TVC? As it’s under a little more pressure now, perhaps yes.

(2) Expansion: Flipkart started selling other stuff back in March, like CDs and electronics, which was a punch to HomeShop18’s face. In return, HomeShop18 flexed its muscles and acquired CoinJoos to improve its online bookstore firepower. This way, HomeShop18 acquired some customers and a team of folks who can quickly help it enter the online book shopping market.

(3) Amazon: Uh oh, here’s comes big daddy, Amazon.com. Yes, the US giant is coming to town. I mean they are already here, but this time round they mean real business as they look to sell things online in India. Amazon has the cash and knowledge to make this a success, provided they are able to localize their service well in India.

Some HomeShop18’s sudden spending spree does make sense if you connect all the events together. The timing of the logo redesign was right after the acquisition of Coinjoos. And the TVC follows up to hit hard on its new image and authority in the Indian e-commerce market. I wonder what else HomeShop18 has in the pipeline – and how its competitors will react.

Let the e-commerce war in India begin.