Alibaba’s recent move shows that hybrid retail is the sensible thing to do. The company has been on a shopping spree adding physical retailers to its arsenal. Alibaba is trying to snap up Intime Retail Group, a company that runs malls and retail chains, for a princely $2.6 billion to help the latter go private. Several online retailers are taking this route especially in fashion, when the shoppers want to try out the clothes before they buy them. Therefore, shoppers try on or feel the products in the physical stores, but order them online.
This isn’t Alibaba’s first brush with physical retail. It holds a share in consumer electronics retail chains Suning Commerce and Haier. Alibaba’s CEO Daniel Zhang says,
“Today we cannot just separate online and offline.”
Closer home, Amazon, Myntra, Urban Ladder, PepperFry and others have established a physical presence. Flipkart has also been mulling over the idea.
Analysts are pro a balanced retail scenario. Tom Birtwhistle, senior manager in PwC Hong Kong says,
“To say that bricks and mortar is dead is wrong, it just needs to evolve, into smaller-format stores, for example, and embrace in-store digital technology.”
Alain Bejjani, CEO of Majid Al Futtaim Holding (UAE based mall and retail chain) puts it very poignantly,
“It’s about the seamlessness of the journey, and total integration between online and offline.”
Birtwhistle feels that the problem online corporates face is in efficient data collection. He says,
“If customers are buying through a third party you are never going to get the same level of data granularity on the customer as if it was yours. That’s what all the big corporations are beginning to grapple with. Linking data between on and offline is difficult. Solving that problem is the multi-billion-dollar question. No one has really got an answer to that yet.”
Others with the same ideas
There are increasing tie-ups between physical and online retailers. American beauty and perfume manufacturer Coty bought a stake in online direct selling group Younique. Legacy consumer goods manufacturer Unilever bought the Dollar Shave Club, a direct to consumer razor company, for $ 1 billion.
The scene in India is ambivalent, with physical retailers at war with their online counterparts citing unfair trade practises. While most physical stores have an online presence, and vice versa, perhaps the two ought to join hands and come up with a mutually beneficial understanding that keeps everyone happy.