Online retail, globally, is witnessing an interesting scenario. They are turning offline or brick and mortar, on the other hand, physical stores or brick and mortar stores are turning online.
When online retail started, it was perceived as an extension of the physical retail. But e-commerce shaped in a different way. It reached to a situation where it was perceived as a threat to physical stores.
However, the way things are shaping up for the industry, 10 years down the line, e-commerce will have to bow down and accept the authenticity and singularity of physical retailers. This is what has already started happening.
Indian e-commerce company Flipkart’s apparel website Myntra taking steps to take over physical stores of American fashion store Forever 21 in India is a nice example of this trend.
While physical fashion retailing giants like Reliance Retail is launching its online website, AJIO.com, e-commerce fashion giants are formulising strategies to expand into physical retails. So those retailers who are online are also increasing their presence in offline; and vice versa is also true.
The scenario is U.S. is also similar. The world’s largest online retailer Amazon.com has expanded into physical retail only last year. Amazon has, by now, opened two physical book stores in The United States and plans to open 300-400 in all. The idea is to enhance the delivery process. The book store will be able play as a pick up location as well as help in warehousing. So these will solve the dual purpose.
The major benefit of having a brick and mortar store for a website is to strengthen its customer relationship.
A study by Ipsos Media CT and Sterling Brands along with Google found out that 3 out of 4 people who find local information in search results helpful are more likely to visit stores. The reason is simple. It is the “touch-and-feel” factor.
Most customers want to touch and feel the product before purchasing it. This factor is not only limited to books and clothes but also to furniture. A U.K. based designer furniture e-tailer, made.com recently opened its international physical store in Amsterdam. This happened after made.com opened showrooms in London.
Ning Li, the founder of made.com, in a report by retail-week said that Made.com’s move into bricks-and-mortar showrooms in London and Leeds was fulfilling the needs of a “segment of customers [who] need to see and touch the product before they purchase.”
He said in the report that 90% of the e-retailers customers will continue to make purchases without going to a showroom, but added that “one in every three or four customers” has bought goods on Made.com “as a result of a showroom visit.”
Online retailers are now better understanding the importance of touch-and-feel contact points. It also adds to the credibility of the brand.
Online retailers have now started focusing on customer relationship management, but whether this will sustain for long is a question, especially in India.
A customer goes to a shop with a mindset of buying something. If the customer has to go through a long procedure of seeing the product in the store, then going to the website or app to order it and wait for a day or two to get it delivered, a local physical retailer would be the preference any day.
Scud Café is a good example. The organic food store retail chain started in 1997 in Vancouver to sell organic food in the urban areas of Canada and in the United States. But it chose to go online; and now customers can create from B.C apples to artisan cheese on the Spud website. The model became a huge success one for the company.
“We have a lot of customers that do and have actually stopped ordering them off the Spud website.” said Nikita Scringer, who runs the Be Fresh cafe in the Shawnessy YMCA in Calgary.
Athleta, an apparel store chain, acquired by Gap, was an earlier entrant in the online commerce and it had started operations in 1999, but it moved to start physical stores after 10 years. The chain currently has 80 bricks and mortar physical stores.
The trend of moving towards offline for online e-tailers has grown very fast in the last few months. The omni-channel retailing is fast catching up like a virus.
Forbes online, in its article titled ‘Online Retailers Moving Into Offline Shopping, writes, “Fast Omni-channel retail is quickly taking on new meaning. It’s no longer only about traditional retailers creating an online presence to satisfy shoppers’ demands for “anytime, anywhere, anyhow.”
Smart digital retailers are beginning to recognize that they too need a broader, multi-channel approach for many of the same reasons offline retailers do.”
In India, the reverse trend is also shaping up. Traditionally offline retailers are also opting for online. Godrej Groups’ premium food retail chain Natures Basket has tied up with online retailers Snapdeal and Amazon India to sell its 400 products to 8,500 cities. In addition to that, food retailer is also revamping its own website. Company hopes to get a boost in the revenue after this step.
Brick-and mortar companies wake up after dwindling sales in the empty malls and they want to diversify their channel sales.
There is another reason for physical stores to go online in the delivery process. Debashish Mukherjee, A.T. Keyrney partner says, “Our research shows that more than 50 per cent customers go online at some stage of the search and discovery process. So, by not being online, you lose 50 per cent of the chance of being considered by a set of customers.”
Mukherjee is of the view that omni-channel strategy is the demand of the time. So the game is very simple: online is going offline and what was earlier only offline is now toying up with online. They are doing it to increase their visibility.
Venture capitalists are realizing this very fast that ultimately the success of online commerce lies in the offline world as they command the real power in the market. This is the main reason physical stores are moving online to tap the hitherto untapped market.
If the retailer has a good online presence, automatically the level of trust in the brand is established in the minds of the customer.