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Apr, 01 2014

Online brands take off from the click runway

Moving from click to brick and mortar is the hottest trend across online industry. Online portals are morphing their business models to broaden their horizon and keeping their brand intact from fierce competition that retail industry is witnessing today.

Call it a strategy to woo the customers or experiment with the offline route; online portals are now enthusiastic about foraying into franchise route to further make a mark in the industry. So far, many online portals have chosen the offline mode which comprises of Caratlane.com, an online jewellery retailer which has set up its 'Solitaire Experience Lounge'. Apart from Jewellery, even online travel agencies are looking at expanding their offline presence through franchisees to gain greater share of holiday market that remains largely dependent upon traditional brick and mortar agents. The travel agencies that have taken the offline route include  MakeMyTrip.com, Ezeego1.com and Yatra Online Pvt. Ltd. Some online businesses are turning to act like a brochure for offline customers and vice versa. According to a research report by Associated Chambers of Commerce and Industry of India (Assocham), the online retail market in India is expected to reach Rs 70 billion by 2015 from the Rs 20 billion market in 2011.  

 

What made them foray into offline space?

Leaving cushy jobs aside and hopping on to new pathways that generate more revenues is what that is picking up pace in a market flooded with plethora of brands. To discover, what really motivated them to launch their physical stores, TFW got candid with well-known e-tailers to understand what made them diversify into offline business.

Firstcry.com is one of the leading online and offline players for all baby and kids requirements between the age of 0 to 9 years. It's brainchild of Supam Maheshwari and Amitava Saha in 2010. Eight years ago, when they used to travel abroad in the earlier jobs, they would pick up a lot of things for their kids because the quality of products available abroad could be trusted and more so, because the choices for baby products in India were limited. Looking at these lacunae as a business opportunity, they conceptualized firstcry. Talking about the challenges they have had gone through, Supam Maheshwari Founder Firstcry.com says: “The biggest challenge in the initial days was about convincing our various partners both on the supply and fulfilment side about the potential of e-commerce in general and the baby products business in particular.  However after several meetings they started to believe in our vision and then there was no looking back.”

Another brand,  Lenskart.com, largest online retailer of fashionable and stylish eyeglasses, sunglasses and contact lenses which was incepted in 2010, has today firmly established its position as the leading eyewear portal in the country. The company was founded by Peyush Bansal who is a passionate online entrepreneur and former Microsoft product manager. Lenskart.com has lately joined the league by venturing into offline business with the launch of its brand's exclusive stores.  Talking about his move, Peyush Bansal, Founder, Lenskart.com: “Serving the varied eyewear needs of people pan-India, Lenskart.com has extended its operations to the offline space with the click and mortar model by opening physical franchise stores. With this, Lenskart.com has come to the ground to offer the exclusive opportunity of 'touch and feel' to its patrons to choose the product they love. This model enables a customer to walk in, like and buy a product he prefers. However, if the customer would like a different variant of the product i.e. a different colour that is unavailable at the shop, he can place the order online. The store can also take the frame size and prescription and place the order online for the customer. The franchise outlets are an extension of the brand. They aim to help customers to get eye check-ups locally and buy the right Lenskart products.”

On the other side, Craftsvilla.com's Founder Manoj Gupta poured his heart out while sharing his experience in setting up carftsvilla.com. He said: “The idea of launching craftsvilla came in mind during our trip to Kutch from Mumbai; we saw women sitting in a group and weaving threads together  into amazing embroidered sarees, shawls and cushions covers, tie and dye apparel like Bandhani stoles, intricately weaved rugs and hand block printed bed sheets and Kurtis. After a week there, we knew our next journey is not back to Mumbai but bringing art and craft centers like Kutch to global audience. With this inspiration, Craftsvilla.com was born. First year was a complete chaos as we struggled on multiple fronts, be it getting funds for our venture, generating initial sales, team building and biggest of all adjusting schedules to ensure kids and parents are not left on side path.  What ultimately drove us ahead is the passion and satisfaction of improving livelihoods of so many artisans.” With brick & mortar concept, he says: “We are looking to acquire new offline customers as lot of customers still buy offline in India. We are also looking to enhance our brand so that online customers convert easily on our website.” Swiss Military, a premium lifestyle accessories brand, which has strong presence though e-commerce, corporate gifting and in-flight sales, is also willing to venture into brick and mortar format through franchising. Commenting on same, Anuj  Sawhney, MD, Swiss Military Worldwide, says: “What we have learnt with our global operations in over 26 countries is that every market is different in terms of consumer tastes and price points. This is even more relevant in the context of the Indian sub-division where the big cultural diversities made it essential for us to customise the product line to suit Indian taste buds and pockets. Therefore a decision was taken to first penetrate the market via the e-commerce, inflight and corporate gifting route in order to make inroads into a new market and extract valuable first hand market research information before we began expanding into the retail format pan India.” Talking further about the plan, he says: “The retail launch plan will again follow the global company mandate of first entering the test phase into a new format before taking the plunge with the franchise model route due later this year. It is for this reason that the retail launch has been broken down phase-wise. In phase 1, we would be launching MBO's (presence in Multi-Brand Outlets) in North India alone. On successful implementation, we would expand the MBO presence on a pan-India basis. Once the MBO's are firmly planted pan-India in key retail outlets including mass retail and large format stores, we would be entering the franchise model for the brand.”

It's Our Studio, Mumbai Based brand which provides an eclectic merchandise mix of niche designer products in the gadgets, accessories, lifestyle and home products, is also ready to get into offline business. Talking about their move, Samir Virani, Founder, It's Our Studio, says: “E-commerce sector is one of the toughest sectors in India. Over the years, we have come across various kinds of people who have appreciated our products but still hesitate to buy online due to security issues over the credit card frauds which keep happening. Also, what I feel is the in India the 'Touch & Feel' factor is still empowering over ecommerce which would take time to change. Since, we cater to a large audience this was the need of the hour and hence I decided to open up our flagship store in Mumbai to begin with.”

On sharing his thoughts on targeting offline mode, Vikram Chopra, MD and Co-Founder, FabFurnish.com, feels: “Indian home and furniture is a $20bn market growing at a fast pace but surprisingly lacks organised brands of scale and repute.  We saw this as a big opportunity to tap and hence, we started FabFurnish.com with a vision to help consumers create beautiful homes in affordable budgets. We are striving to be India's largest furniture and home décor brand.” On adding what made them launch offline store, he added: “As a brand, we want to provide a holistic experience to consumers, and offline stores help us do that by giving customers a chance to experience the products before they buy. Thus, stores also help us build trust and credibility.”

 

Are you the preferred franchisee?  

Short-listing the right franchisee on board is one of the trickiest tasks. Agreeing to same that franchisor and franchisee relationship is long term, Supam Maheshwari says: “Firstly, we check the level of involvement the prospective franchisee is likely to have in the business. That's because we do not look for 'investors', but rather for 'franchisees' who are involved in their business. Secondly, we'd like to partner with franchisees that have knowledge of the local markets.  Thirdly, of course, we look at the financial strength of the franchisee prospect.” Lenskart.com looks for entrepreneurs and retailers who have a want to excel in a customer facing environment and look for long-term association with a fast growing brand. A Lenskart franchisee has to be customer centric, fashion conscious and willing to build the business in the catchment from ground up.

 

Preferred retail distribution channel & why?

Supam Maheshwari adds: “We follow only the franchise format in retail as we believe it creates a win-win situation for the brand and the franchisee. The strength of the brand is amplified with the local knowledge and involvement of a franchisee.  We plan to be at around 125 stores, nationally, by the end of this calendar year. All the stores would be franchised stores.” As far franchising is concerned, Samir Virani, says: “Yes, that is on cards, we are in talks with few people who would like to open up our store in various parts of the country. Hopefully, we should have 5-6 franchisees by the year end.” On a similar note, Anuj Sawhney informs: “We would ideally be looking at around 150 franchise outlets in strategic cities pan-India by this year end itself. Plans are being drawn to have a 80:20 ratio for franchise owned and company- owned stores in the market. The requirements and criteria with financials would be revealed close to the franchise model launch later this year.”

Vikram Chopra, on other side, affirms: “We are looking at opening partner stores in Pune, Hyderabad, Noida, New Delhi and Chennai as there is an encouraging customer demand in these cities. We should open 4-5 more stores this year. All of these will be franchisee outlets.”

Whereas, Peyush Bansal, notifies: “Our preferred retail formats are location specific and are focused on delivering access to the Lenskart portfolio for all our customers. We expect to open close to 100 outlets over next two years and it would be driven by a franchise model.” For lenskart.com, metros, tier I and selective tier II markets are on expansion radar. The brand assesses each of the potential cities based on the business requirements.

On the similar lines, Manoj Gupta adds: “We are looking at capital efficient kiosk and shop in shop models with very minimal inventory but with a mix of online and offline. We would like this model as it is very capital efficient, give high RoI to our franchisee and uses information technology to reduce costs for the franchisees.” Craftsvilla.com is looking to open 10 outlets this year and 25 outlets next year. All these outlets will be franchisee owned.

 

Which one will survive B&M or Click?

Now, the question is - is this trend going to stay for long or will just vanish away as a short-lived rage? Although, both the concepts are in demand, it is difficult to figure out which one would stay longer. Online brands are able to tap larger markets and masses across the country whereas offline brands are able to tap only specific market where the franchisor wants to spread wings and considering the right location to tap the customer. Talking about which format tops the charts on the basis of revenues and footfalls it generates, Vikram Chopra, says: “By its very nature, online breaks all barriers and manages to reach out to larger masses. Revenue per customer online is quite in line with offline.” Whereas, Supam Maheshwari diplomatically considers that both online and offline are equally rewarding formats. The purpose and role of each of the formats is different and they both fulfil the purpose fantastically well. 

 

Target cities on expansion radar

DELHI | CHENNAI | HYDERABAD | BANGALORE | MUMBAI | KOLKATA

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