There was a clear demarcation line with regard to the Indian retail industry, i.e. Offline and Online. But the line has blurred in the last few years. Mainly because firms from each side have realized that in order to stay relevant they need to be present in both, offline and online retail.
While a lot is spoken about how offline retailers are collaborating with ecommerce biggies like Amazon and Flipkart to increase their sales, online players are equally eager to spread offline presence to multiply their revenue.
What do customers want?
Indian consumers haven’t made up their mind as to whether they prefer offline medium or online.
One on hand, big retail outlets complain that consumers window-shop in their store but buy the same product online due to heavy discounts. On the other hand, online stores like Lenskart believe that consumers browse online but don’t click on the ‘buy’ button.
“While there are 300 million Indians online, only 50-60 million are purchasing online. The high brand awareness is not turning into commensurate sales and the challenge is how to monetise these customers,” affirmed TCM Sundaram, Founder & Managing Director, IDG Ventures India.
Experts believe that overvaluing the size of the e-commerce market and customer evolution has also led to the wide gap between buyers who are online and actual online buyers.
Therefore, the common perception is that the majority of the buyers prefer online stores, but the reality is different.
Better sales conversions
Etailers have realized that consumers still want to touch-and-feel the product, especially for product categories such as furniture, prescription glasses and lingerie. Hence, the decision to open brick-and-mortars has resulted in high sales.
“Conversion became three to four times higher than on the website since furniture is a high-value product… Customers see ads on TV and then go to the store. They can feel the furniture and get a better brand experience in an offline store,” said Rajiv Srivatsa, co-founder of online furniture store Urban Ladder.
Lifestyle brand Chumbak’s offline sales accounts for 70% of its business, whereas 30% comes from its online channel.
Another compelling factor is that investing in a physical store space ends up being far more economical than spending on hoardings and other form of advertisements for etailers.
Ashish Shah, COO, Pepperfry explained this by stating,
“In a category like ours, it is important for the customer to engage with us and experience the furniture they are going to buy. A hoarding costs Rs 14 lakh for 20-25 days and all it says is our brand name. Now at the price of a hoarding, I run a studio in a prime location where customers can interact with my team and touch and feel the products.”
It is clear that the future belongs to omni-channel as brands can’t depend on one retail platform.