E-commerce provides scale that is not possible in retail stores, say experts
E-commerce companies are geared up for customer acquisition and have increased their offline presence as well. The firms expect to draw traffic through online presence but convert sales through physical stores.
According to industry experts, India is ready for online sales and does not need physical stores beyond the first purchase.
These views and more were expressed by panellists at the recent Techcircle E-commerce Forum 2015. The panel on "Impact of e-commerce on Indian retail industry" was moderated by Samir Kumar, managing director, Inventus Capital Partners. Others like Abhishek Lal, ecommerce director, Adidas Group India; Vikram Chopra, co-founder, FabFurnish.com; Gaurav Singh Kushwaha, founder & CEO, BlueStone.com; Falguni Nayar, CEO, Nykaa.com; and Dippak Khurana, co-founder & CEO, Vserv participated in the discussion.
"Online channels are useful for collecting consumer data and using that for retail stores as well. Retail space in India is hard to come by, hence retail expansion takes a long time and a lot of energy goes in and we see online sales growing at much faster pace," said Lal of Adidas Group India.
The panellists started off with a discussion on the shift to mobile, increased online footfalls and growing confidence of customers in online websites. Many e-commerce sites including Nykaa, BlueStone and FabFurnish have opened their 'experience stores' to build brand image among customers. "What we observed is that people were loving BlueStone for all the designs and options where they could browse through thousands of rings before making any purchase but they still not go ahead and buy it because they are not used to buying a Rs 50,000 or Rs 70,000 item which is so intangible. So we had to open guide stores who could help customers get the comfort level," said Kushwaha of BlueStone.com.
Though panelists expect retail stores to leverage and build a brand image, they target maximum sales through websites in the long run. Retail stores are not cost effective compared with websites. "In the physical stores, you have rental and people costs. Those numbers in online space are manageable," said Nayar of Nykaa.com. Experts asserted that online traffic is phenomenal which cannot be reflected across retail stores. "Online drives scale and gives us the traffic but offline helps us build brand, awareness and trust with the consumer," said Chopra of FabFurnish.com. Most agreed on a perfect marriage between retail stores or experience centres and sales-driven ecommerce websites to engage with customer. Panelists agreed on omni-channel presence for the time being to help build confidence despite customer acquisition costs running high.
The ultimate winner among e-commerce firms will be the one that has complete customer data and insights. "In my view, companies which have phenomenal amount of data and insights are the ones which will capture economic value. Brands will get built out of data," said Khurana of Vserv.