Slow offline sales lead to more online presence

With Indian e-commerce gaining momentum by the day, more and more offline retailers are trying to incorporate online retailing into their sales strategy to counter slow sales. About 70% of the top 100 consumer brands in India already have online presence in one way or the other. Industry experts predict this to increase to 100% with all of them trying to make online retailing a significant part of business strategy.

In addition to vast reach without geographical boundaries, online channels mean significantly lower operating costs thank brick and mortar shops. According to reports, organised retail (mainly offline businesses) account for only 8% ($38.2 billion of $478 billion retail market) in more than two years of existence.

Whereas, online retail already account for 10% ($3.1 billion) of the organised retail market within a short span of time. In five years, it is expected to be around 15% or $22 billion.

Reasons for strengthening online presence

Most retailers are strengthening their online presence now mainly due to the following reasons:

• Rapid growth of online retail
  
• Lesser spending from consumers
• High rental and operating costs
• Limited real estate options
• Wider reach to smaller towns and cities

Example: Puma

Last year, footfalls across 300 country-wide Puma stores fell by 25%. However, online sales increased due to discounts and promotions. While offline sales increased by 10% only, online sales increased much faster at the rate of 30-40%, that too with a much smaller customer base. Sales through Myntra and Jabong contributed to 50% of Puma’s online revenue last year.

Example: Catwalk

With around 400 stores, Catwalk already had partnerships with Flipkart and Jabong. Additionally, the company’s structure was tweaked last year to set up a new company in compliance with FDI norms when Amazon’s marketplace was launched in India. Online sales accounted for nearly half of its overall sales growth of 40%.

Example: Kimaya

Within six months of online presence, multi-brand designer wear retailer Kimaya had 6% of sales came from online retail last year. One-fifth of Kimaya’s revenue is expected from online selling in the next three years and over one-third of revenue in five years. It launched Kimaya.in and Karmic.in last year and will soon launch designerrack.com in the marketplace model. Next year, three more sites selling plus-size clothing, edgy clothing and accessories.

Launch of new brands

New brands are also being launched online. Many global brands like Dorothy Perkins and Miss Selfridge were launched in India last year through online channels. Industry experts expect more brands to be launched online eventually due to the wider reach and easier access that online channels can provide.

Opportunity for aspiring Indian Online sellers

With a number of marketplace options with their endless offers and support systems, now is the time to enter the online selling space if you haven’t already. Quality products are sure to sell and gain popularity with consumers. Also, with plummeting rental charges and operating costs, online channels are more cost-effective because much lesser capital is required