On one hand statistics suggest that online retail sales are not even 1% of the total retail sales in India. On the other hand we hear news about ecommerce killing traditional retail. How?
Ecommerce is growing at a great speed and big retailers are worried about online ventures eating up their market. Probably because even though 1% is a small number for now, it is an indicator for times ahead if retailers don’t do anything about it.
In fact, according to a report by Retailers Association of India and property consultant, Knight Frank India Pvt. Ltd, it is predicted that online retail in India will be equivalent to traditional retail in the next 5 years.
Another reason can be that it’s hurting the Big Guns of Retail the most and they aren’t too happy about it.
Up until last year, trade unions wanted a ban on ecommerce, big retailers lashed out on online companies for giving out insane discounts and brands felt immense pressure from wholesalers and merchants to give them competitive pricing solutions.
However as discounts are phasing out, retailers have an open window to enter ecommerce and control the damage. Besides discounts, the things that still work in online marketplaces’ favour are convenience of ordering from anywhere and getting it delivered anywhere. And the same convenient features traditional retailers can offer too.
This is why brick-and-mortar stores are tilting toward Omni Channel Retailing. This is the ‘open window’ where it’s no longer solely about deep discounts. On the contrary it’s all about the ability to provide customers good quality products that they can buy from anywhere.
Best of all worlds (desktop, physical store and mobile) is what omni channel retailing’s core purpose is. It blurs the line between online and offline. Customer becomes the focal point as they get the option to buy across all platforms, be it stores, online or through mobile phones. It empowers customers to be in complete control of their shopping experience and it enables retailers to support their physical outlets.
An omni channel retail model may include few or all of these modes of shopping:
Some of key features of omni channel are:
There are few challenges that if not tackled well can lead to complete failure. They are:
Almost every big retail chain, be it Shoppers Stop, Lifestyle stores, Reliance Retail, Tata Group, or Future group, all are working on their omni retail strategy.
Here’s a quick look at how traditional retailers are adopting digital format.
Just like India, even in the US major portion of the retail industry is held by brick-and-mortar stores. While in India, ecommerce is only 1% of the total net retail sales as mentioned above, in the US it accounts to 7% only of the total sales and is expected to touch 9% in the next five years.
Omni retail is still in nascent stage in the US. Yet top American etailers are traditional retailers’ with online stores. According to a study, 90% of the retail sales in the US happen in stores whereas 95% of online sales belong to stores that have offline presence. Some of the major players that are leaders on this front are Nordstrom, Best Buy, Macy’s, Wal-Mart, Target and Bed Bath & Beyond.
Same is the case with physical retailers of Australia and UK with online stores that are doing much better than pure online players with more than 50% share.
If omni retail is just a knee jerk reaction to the growing popularity of online sites then the strategy won’t work. By now shoppers are used to quick checkout, smooth payment process, free delivery & returns, and accurate information about delivery timelines, thanks to top marketplaces. If they get anything less than that, be assured that customers won’t come back.
It is only now that organized retailers are keeping aside separate finance for developing the digital arms of their business. It would still take at least 2-3 years for brick-and-mortar stores to polish their online stores and be at par with pure online portals. A lot would depend on investments in technology, product development, marketing and advertising.
Is there favourable environment for omni retail in India? Yes! Will it work? Would depend on how dedicated organised retailers are to their online journey.
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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