Video Commerce Could Help The Indian SMEs

With print advertising, the strategy involved publishing an ad and assuming that this sufficed to market a product and attract customers. The approach was effective and worked for over a century until the advent of the digital-first generation. Expectations changed with consumers desiring, among others, active engagement with ads and currently, an immersive experience that transforms the interaction into a purchase. What are those contemporary advertising methods that not only thrive in the digital age but also possess the potential for seamless integration with direct e-commerce channels?

As of 2023, India boasted nearly 900 million internet users, with a penetration rate of nearly 50%, of which notably 56% is in rural areas. Projections anticipate this figure to exceed 1.6 billion users by 2050, highlighting substantial market potential for internet services. This growth is particularly promising, given India's demographic profile. Video consumption, a major driver, has witnessed heightened usage auguring well for the digital advertising industry and businesses both.

In fact, research shows that of all the U.S. consumers who watched live or pre-recorded online shopping videos, more than half had made a purchase from the event. It also reported that livestream e-commerce using video content on digital platforms to promote or sell products and services in real time has the highest buyers in China.

Hence, India stands at the forefront of the creator economy, propelled by burgeoning digital-native youth population and a thriving online ecosystem. The country has witnessed an explosive growth in content creators across diverse platforms such as YouTube, Instagram, showcasing its wide talent spanning from entertainment and lifestyle to educational content.

India's creator economy has not only embraced entertainment but has also evolved into a powerful force in education, lifestyle, and technology sectors. The diverse cultural landscape provides a wealth of narratives, making it an ideal creative ground for content creation. Additionally, the advent of affordable smartphones has democratically enabled individuals from various backgrounds to participate, fostering inclusivity and fuelling the rapid expansion of the creator economy in India. Statista predicts a surge in the digital marketing industry, reaching Rs 539 billion by 2024. This underscores the immense potential of newer advertising formats, notably Banner, Display, and Video advertising.

As the world consumes more content and specifically short-video content, companies aiming for better advertising control and better ROI, will leverage their own websites/apps for the same purpose taking the help of software providers who onboard their existing social media content onto their websites/apps seamlessly. Video commerce via shoppable videos is therefore gaining momentum, streamlining the customer journey by enabling direct purchases from images or videos. The ascent of Shoppable-videos marks an important turning point in e-commerce and digital marketing.

With consumers increasingly engaging with video content, integrating a seamless shopping experience within these videos has become a strategic move for businesses. Shoppable videos enable viewers to directly purchase products featured in the content, blurring the lines between entertainment and commerce. This innovative approach not only caters to the evolving preferences of consumers but also provides brands with an effective tool to drive conversions and enhance user engagement.

With appropriate marketing strategies, effective digital marketing now offers seamless transactions, easing the need for substantial capital investment, a notable advantage for Indian SMEs and small businesses. SME’s have started considering business models involving production-to-sales via direct purchase options by using video commerce. By incorporating product links or direct purchase options within engaging video content, SMEs can transform passive viewers into active customers by showcasing their products in action, offer tutorials, or highlight key features through these videos, turning them into a dynamic sales channel. 

This strategy not only simplifies the customer journey but also increases the likelihood of immediate and on-spot purchases. In contrast to the high costs on large e-commerce market platforms, digital advertising with conversions to shopping empower SMEs to directly engage with their audience and drive sales without hefty charges. By reducing dependence on expensive intermediaries, SMEs can redirect resources towards product quality and innovation, fostering a more level playing field and opening new opportunities for small businesses in the competitive e-commerce arena.

Ultimately, this not only facilitates market access but also promotes their products. The ripple effect includes business expansion, job generation, increased tax revenue for governments, and, consequently, holistic economic growth. This is especially pivotal for low-middle income India, where digital avenues have the potential to generate more livelihood opportunities.

Srinath Sridharan is a Policy Researcher and Corporate Advisor. Naman Devdaksh is a Software Evangelist.

The views expressed here are those of the authors and do not necessarily represent the views of NDTV Profit or its editorial team.