Online Retailers spinning web around Offline Retailers

If the recent example of Moto G mobile phone is anything to go by, gone are the days when customers wanted to touch and feel a product before deciding to buy it. Motorola launched the Moto G phone in India exclusively through Flipkart and to the surprise of everyone, the phone was out of stock within an hour.

With all the recent buzz around Indian ecommerce, in the right direction with Flipkart’s sales crossing $1 billion, eBay’s increased stake in Snapdeal, more capital for Myntra etc. online brands seem to be stacking up more effectively against their offline counterparts.

 

Advantages of online brands/retailers against offline brands

A study based on the opinions of people in the age group 18-44 exposed to both online and offline retail, ie. people who visit websites as also supermarkets, hypermarkets and departmental stores, revealed the following:

  • Online brands are much stronger and healthier in terms of brand identity than offline brands. Physical stores have always been competing to establish brand identity and superiority but are restricted by geography and location. However, online stores don’t have the restrictions of a physical location and have wider reach across different cities and towns.
  • Online retailers have better differentiation especially while selling through established marketplaces like Flipkart, Amazon, Myntra, Snapdeal etc.
  • Online retailers can cash in on the advertising done by marketplaces like Flipkart and Snapdeal, which have helped to increase their identity and success as marketplaces, without any extra effort and expenditure.
  • Online retailers are able to give unbeatable discounts and deals, thus giving maximum value to customers. Their brands therefore have stronger value and positive connotations amongst customers.
  • Online retailers are associated with trust due to the credibility of marketplaces like Flipkart and Snapdeal. Hence, customers are motivated and enticed into making purchases without actually seeing or touching the products.

Example – Myntra vs Shoppers Stop

Shoppers stop has one of the most successful shopping destinations for fashion conscious Indians for years. With its presence in many cities across India, it has managed to have a loyal customer base who purchase their latest and trendy products.

However, Myntra with its current sales of $100 million, aims to overtake Shoppers stop in the next two years. Shoppers Stop’s revenue is almost five times that of Myntra. The value perception in customers’ minds regarding Myntra is already twice that for Shoppers Stop. Myntra has been able to build the perception of being trendy and stylish, and is considered to be a chic fashion destination.

Myntra faces stiff competition from other online marketplaces like Jabong and Flipkart.

Opportunity for Indian Online sellers with rise in online retailing

Online retail is growing and by the looks of it, is here to stay.

  • Online sellers can reach out to the smallest cities, which is otherwise not possible with physical stores, due to increase in smartphone and internet penetration. Sales from mobile phones already account for 20% of Flipkart’s sales.
  • Due to the popularity of online selling, brick-and-mortar may be exploring the option of entering the online space. However, it will be very challenging for them to establish their identity in markets where they don’t have a physical presence. The pricing advantage makes it easier for online sellers to sell easier.

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