Even if e-commerce has been posting growth, especially in the field of fashion, there are clear signs that the retail business will have to chip in for physical stores as well in order to chart out a proper growth path, writes Tanya Krishna
While we thought that online retail was the way ahead in today’s world with India being the fastest growing ecommerce market right now, the picture isn’t really that rosy. With competition rising, several reputed and established e-commerce companies are opening physical stores.
The Trend Triggers
The reality is that online is still only a fraction of the overall retail business and is going to be that way for the next few years at the very least. Here are the triggers driving this trend:
The Trust Factor
A major share of the overall consumers still prefer buying offline. And this is especially true for the bigger ticket items that makes them head to a physical store. This is precisely why online players who are into higher value items like jewellery, etc. are going offline. Atul Sinha, Senior Vice President - Marketing and Retail Sales, CaratLane, says, “Carat-Lane started with a mission to democratize jewellery. As we went along this journey, what we found out was that there are many customers who would add an item to the cart but they would stop from making the payment. This got us into thinking that we should open our offline retail store and now, most of our customers begin their journey with shortlisting the items online and then go on to make the transaction at our offline store.”
Touch and Feel is the Essence
Besides, a large section of buyers are more comfortable shopping for even a category like fashion only after experiencing it through touch and feel. Ananth Narayanan affirms, “The segment has a huge potential ahead and one of the strategies that we are looking at in order to bring more and more offline buyers into the online fold is omnichannel. The primary reason for us to consider opening physical stores is to allow customers experience the brands following which they can comfortably shop both online and offline. We have created such an experience zone for one of our in-house brand, Roadster, in Bengaluru.”
There is an urgent need to build a bridge between the ecommerce and retail space and O2O seems to be the new buzzword. Rajinder Mattoo, Head of Retail, Vajor, agrees, “Online brands need to offer the touch and feel experience to its customers in order to build confidence in the product.”
Customer Acquisition Cost
For a brand like Voylla, the problem lies in customer acquisition. The cost of acquiring customers for a small online player has become prohibitive and a brand has to keep an eye on the return on investment and the fact remains that this investment doesn’t really make sense because the cost is very high and customer loyalty in e-commerce is very low. Elaborating, Vishwas Shringi, CEO, Voylla, says, “Given the rising aspirations in the Tier II and III cities and lack of logistics support, Voylla needed to go offline in order to grow and to command a good market share.”
The Discount Dilemma
One of the factors that really grab the customers’ attention to e commerce remains the heavy discounts offered. However, premium brands cannot swear by this tendency. Siddhant Gupta, Partner, Chique, agrees, “While e-commerce remains largely a discount-driven marketplace, offline helps in product differentiation and generating consumer trust. We are a premium brand and cannot play the discounting game which online business requires.”
Store Formats to Look Out For
While moving to offline retail definitely has its charm, what exactly should be the store format these e-commerce brands need to adopt for best possible returns? Talking about the trends, Atul Sinha asserts, “For e-commerce players, to be able to offer the same service and brand interaction in retail stores which a customer is used to in the online space is the key factor.” Talking about franchising options, Rajinder Mattoo says, “Its a very Catch 22 situation. We are quite sure about how we project our brand. For now, we are looking at premium malls and highstreets for expansion.”
Going Forward
Going forward, it is believed that not one channel is overpowering the other, but it’s more about the synchronisation of the online and offline channels. With a majority of e-commerce firms in consonance with this thought, it is important that both online and offline players pull their weight and play to their full strength and capabilities in the Indian retail landscape.
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