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Jun, 07 2014

The growing phenomenon of online retail

The Indian e-retailing industry is estimated to be worth Rs 12,000 cr approximately. The shift from brick-to-click model has been swift. Given the ever rising demand and changes in lifestyle, this figure will only grow from here. What's prompting this e-r

When scorching sun makes it unbearable to step outside, when cash requirements stop you from buying your desired product, when your local market doesn't offer you the design you have been looking for, when a brand seems to be charging a high price for your desired quality.. jump to the internet and you are most likely to find a solution to all your problems.

The phenomenon of e-retailing has taken the retail industry by storm off late and changed the entire landscape. These days, 'selling' is not merely restricted to facilitating the product to the buyer but making the entire experience very convenient and a whole lot of fun. E-retailing scores big on both these counts.

Changes in today's lifestyle have been driving the youth towards shopping online, as rising disposable incomes have increased the shoppers' appetite but lack of time is making it difficult to enjoy the benefits of some extra cash. That's when e-retailing becomes important as it brings the world market literally at your doorstep or office bay (as per a research, most online shopping happens on weekdays, during office hours and office goers form the biggest chunk of regular customers in this slot).

The stupendous success of retail websites like Myntra, Flipkart, Jabong and then forced many brands to sit up and take notice of the e-revolution. Taking a cue, many of them have taken the e-route and are now selling their merchandise on their respective websites as well as entering into tie-ups with the e-retail giants.

“Women these days are quite updated when it comes to fashion and lifestyle and with the urban crowd being more technology freak, we thought of creating our online space as well. By going online we wanted to assure that we are abreast with the latest marketing tools”, says Akhil Jain, Creative Director, Madame.

Besides having its own online portals, Madame also has association with players like Koovs, Yebhi and Snapdeal.

Pawan Gadia, CEO, Retail and Online, Ferns N Petals points out, “Ferns N Petals started out as a concept of offline flower retail. After sensing the emerging rage of the concept of buying online back in 2002, the online portal was born. Being present at all the spots where customers spend most of their time is of utmost importance. Since today's customer is evolving in terms of easy shopping, internet was an obvious choice.”

Agrees Mahesh Gupta, Chairman, Kent RO Systems Ltd, “E-retail is a trend these days. 4 per cent of our sales are happening online. Online retail will further help us boost our offline retail sales as well.”

Are online sales eating into offline revenues?

Many brands believe this isn't the case. Since the market is so widespread and diverse, e-commerce just helps the brands reach more places and more buyers without competing with or eating into the sales of their offline stores.

“The customer today has deep pockets and e-shop is an add-on store just like we open stores in malls or hi-street. There is no effect on sales of outlets; in fact, it has resulted in an improved brand recall”, opines Akhil Jain of Madame.

Pawan Gadia of Ferns N Petals asserts that reaching the right customer is of utmost importance. “Almost 30 per cent of our business comes from our e-commerce portal, while offline retail has been the key to growth for our business model. We have a robust network of 180 outlets throughout the nation.”

Do franchisees benefit from brand's online sales?

Different brands have different revenue sharing models with their franchisees vis-à-vis the online sales.

Ferns N Petals, a well-known flower gifting service says around 25% of online orders contribute to its business of retail and franchise. “Yes, we share a good proportion of online revenues with our franchisees. We transfer the business generated through our website to the nearest franchisee to ensure timely deliveries. This way both the company and the franchisee work hand in hand to do the business”, opines Gadia.

What payment method suits franchisors and franchisees?

While many brands are fine with various payment methods like Credit Card, Debit Card, Net Banking, EMI (conditional), COD (cash on delivery); some of them are specific in the method of payment that is accepted by them. Not just that, many brands are coming up with new ways and means to make online shopping hassle free for the customers.

“We don't have a COD facility because ours is mainly a gifting portal and the sender would not like the recipient to make the payments. As an e-retailer, Credit / Debit card or net transactions are best for us. But we have initiated a payment option called 'Cash Collection Facility' for customers who are not comfortable to share their credit or debit card details or internet banking. They can book flowers and our collection agent will collect cash from residence of sender and then delivery takes place,” says Gadia.

With increase in internet (broadband) penetration, mobile internet, tablet explosion and online promotion of vernacular languages, e-sales will only move one way-upwards.

One can gauge how fast the online phenomenon is catching up from what Google India has to say.

Nitin Bawankule, Industry Director, Google India, informs: "Evolution of e-commerce market started in 2011 and in a span of just four years, there's been an e-commerce explosion. 60 mn people visited the e- comm websites in the year 2013 and the numbers will rise to 150 mn by 2014 end. The most preferred top five e-commerce websites in India are Snapdeal, Myntra, Jabong, Flipkart and Amazon.”

 

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