Live Issue: Do offline stores help e-commerce portals?

What is the similarity between online commerce portal Firstcry, travel portal MakeMyTrip, or for that matter, BharatMatrimony? They decided to set up physical outlets, some categories much before others. While brick-and-mortar stores are expanding their online presence, many online players are establishing a physical presence.

Ankur Bisen, senior VP - retail and consumer products, Technopak Advisors, explains, “Currently, this area is under experimentation by everybody world-over. People are trying multi-channel or omnichannel reach, which means that they are trying to reach out to consumers through various channels. It is not to say that online business is unable to grow on its own. It is also not to say that online business cannot grow offline. It is more to say that retailers are finding more innovative ways to reach out to the consumer. What offline stores are doing for online players is that it is increasingly seen as an extension of the online retail. Offline is the missing piece, or a piece that people are trying to experiment with so that an omnichannel experience can be created.” In India, however, this is a relatively new phenomenon.

Concurring with Bisen that brands should aim at becoming omnichannel entities, Damodar Mall, chief customer strategy officer (value format), Reliance Retail, says, “Both are pure channels to reach consumers who are shopping both online and offline for their needs. India is not an evolved market. There is no pure-play offline or online consumer. It is not a water-tight compartment.”

Nalin R Khannaa, CEO, Vertebrand, suggests that e-tailers should base their decision to set up offline store based on the category they deal in. He explains that for a new category present online whose credentials are not established, the credibility goes up dramatically if it is seen offline. He adds, “However, in categories like books, what really matters is the price of the product, and relatively, the importance of brick and mortar comes down.” He further suggests a combination of physical and online stores to create maximum impact. He says, “Worldwide, book stores have moved to e-commerce. For instance, Barnes and Noble bookstore has online and offline presence and it is quite successful. It is a lethal combination. But brands usually don’t do that – they do either this or that. Thus, they are not leveraging brick-and-mortar correctly.”

MakeMyTrip also extended its online offering to brick-and-mortar stores. Rajesh Magow, co-founder and CEO-India, MakeMyTrip.com, rationalises, “Holidays are considered a more personalised and high-involvement purchase so customers prefer a face-to-face or in-store consultation. Hence, we extended MakeMyTrip touch points beyond the web to cover nearly 60 key cities and towns across India. The decision to evolve into a hybrid model is completely dependent on the product offering and the opportunity cost of reaching out to the last-mile customer.”

Offering a fashion and lifestyle portal’s perspective, Arun Chandra Mohan, founder and MD, Jabong.com, opines that online portals do not get any advantage when they launch offline. He articulates, “It actually depends on the retailer’s strategy. It could make sense from brand-building perspective and provide access to customers but it does not make sense because as an online company you are present and available in 10,000 or 20,000 pin codes. This also includes offline access areas. The incremental value that you provide being in the offline world is not that much. The online business has a different way of functioning - different speed, different way of branding, different way of marketing, and connecting with the consumer. I believe that some offline stores could compliment that but the focus would remain on the online business. That is the way it should be.”

Magow says that for personalised and high-value transactions such as holiday-bookings, local expertise and context counts. “Brick-and-mortar stores help us reach out to customers who may not be web-savvy and provide them access to value-based offerings we are known for. Today, we have over 35 franchisees and will continue to scale this up as per market demands,” he states. But not before citing another disadvantage for online retailers: “The other thing that is huge in India is breaking of SKUs. Products are available for as low as Rs 5. Those price points will always remain with physical stores.”

  

Travel Portal

Rajesh Magow, co-founder and CEO-India, MakeMyTrip.com

“Customers including those present in tier II and III cities are wary of making high-value transactions online.”

  

Fashion e-tailer

Arun Chandra Mohan, founder and MD, Jabong.com

“Instead of setting up an offline store, you might just want to put up a billboard on-ground that gives a clear and interesting reason for consumer to come log on and buy from your online store.”

  

Retailer

Damodar Mall, chief customer strategy officer (value format), Reliance Retail

“Depending on the category, and business model, the brands should aim at reaching the consumer meaningfully through both channels.”

  

Brand Consultant

Nalin R Khannaa, CEO, Vertebrand

“E-commerce is still slow in India, even though it is growing. For consumers, it is convenient. However, it will only be able to sell products that the consumer is aware of, especially branded products.”

  

Retail Consultant

Ankur Bisen, senior VP – retail and consumer products, Technopak Advisors

“Pure play online retailers have started to look at offline space to create consumer connect, to move closer to the consumer, to register the brand, and give a customer experience that can’t be delivered online.”