Online vs Offline retailers – The age of disruption!


Festival season is around the corner and discounts have always been the biggest click-falls in online & offline retail. Indian shoppers are keenly waiting to these annual SALEBRATIONs with high expectation and excitement. Online retailers have successfully leveraged discounting as a mainstream business model. From being a much anticipated annual event, discounting and sales have become a way of life. As a result, price has emerged as the biggest differentiator driving consumers to shop online or in-store. Online retailers have successfully managed to hijack away customers on the basis of this strategy alone. According to the PWC report, more than 50% consumer shop online because of low rates and convenience (24×7).

Now that online sales are growing at approximately 10 times the rate of brick and mortar, it comes as no surprise when savvy retailers like Future Group beefing up their e-commerce capabilities. Whereas Droom, an online marketplace for automobiles, has now forayed into aerial vehicle segment ,where one can sell, buy or rent ‘luxurious’ private planes or choppers on its platform. What’s going on?

Offline to online. Online to offline. Today’s consumers live multi-dimensional, multi-platform lives –and their buying behaviours reflect that same complex dynamic. In many ways, retailers are now racing to catch up.

Sometimes a consumer can shop online and make a purchase with a few clicks meanwhile; another consumer may need to visit a physical store. They may need to see-and-feel the product they are considering before making a purchase. Or they may collaborate between online and offline stores to make the final choice.

Many physical retailers’ wants to take online competition head-on with a well-crafted strategy that includes several if-you-can’t-beat-them-join-them moves. But at this moment in India’s retail sector, this could well be an opportunity to collaborate and add value to customer service.

The PwC Global report 2015, on multichannel retailing points out that the “physical store has historically proven to be a “powerful, long-lived and adaptable” institution. While in India, the online retail has become popular only over the past few years, online retail has been a part of global retail industry for almost a decade now. Despite this, global online retail constitutes only about 8 to 10% of the total retail.” The reasons why consumers shop in-store are the ability to see, touch and try the merchandise; immediate availability of the product; and being more certain about fit or suitability of the product.

Disruption is the order of the day. E-tailers are scrambling to differentiate themselves from the crowd in order to register the highest gross merchandise sales. In doing so, the combined losses faced by e-tailing companies as a result of their discounting strategies now stand at almost 1,000 crore INR. Meanwhile, traditional offline retailers are also struggling to maintain their position in overall retail. In the next stage of their evolution, how will the online and the offline retailers work? Do we see a possible amalgamation of the channels or at least collaborations to begin with?

By Gaurav Sood

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