Yes it's that time of the year again. The time when all e-commerce players in the country are waging their Twitter, advertising, and billboard wars. With app-only sales, new offers on an hourly basis, and offers catering to night owls at midnight, e-commerce platforms have mostly hit all the right notes to keep a variety of consumers and their sellers happy this festival season.
But how are the offline stores faring? Are these aggressive sales and festive tactics used by VC funded e-commerce stores affecting the business of offline or traditional retail stores? It's a tough question. In one of the events at IIM-B Piyush Kumar Chowhan, Director Strategy, Analytics, Process Engineering Walmart Labs, posed a question to the audience:
"How many of you have shopped at Flipkart and Snapdeal? (There were close to 80 percent show of hands). Now, how many of you have shopped at a Big Bazaar or a mall?" The whole auditorium, including the e-commerce biggies raised their hands. A smug Piyush said, "That answers where we offline or traditional players are at."
However, we cannot ignore the fact that online commerce and retailers have successfully been able to leverage discounting and reel in customers.
In order to get a clearer perspective, YourStory decided to hit the traditional retail lane of Bengaluru’s Commercial Street, which was choc-o-bloc with shoppers even on a weekday, to understand more from offline retailers.
"In the long run, this doesn't matter. There are several aspects of online retail that aren't addressed. There's an issue of touch and feel, especially in cases of apparel. At Eastern Stores, we're able to establish a human connection with the consumer, which an online player cannot," says Faizan, owner of Eastern Stores on Commercial Street.
According to a report by PwC, e-commerce retailers spend close to Rs 100 crores on advertising to ensure the success of their sale periods. "There are deeper issues that aren't published. Deliveries get delayed and stocks issues crop up," adds Faizan.
Being a part of the offline and traditional retail space for years now, Prashant of Jean Point, Commercial Street, says, "The online stores and their sales don't affect us much. We sell jeans. As a product, one needs to try it on feel the material and then buy it, which is difficult with online shopping."
According to Ankur Bisen, Senior Vice President Technopak Advisors, electronics and fashion contribute to USD 7 billion in 2015.
Increasing the heat for offline retailers, Laxmi Narayan who is the store manager for Suman Exports says,
“Yeh online store dikhate kya hai dete kya hai! Inko band ho jaana chahiye, waste hai yeh (these online stores show something and sell something else! They should shut down).”
He vociferously states that sales and offers on online stores have affected his sales this Diwali season. “They’ve cut our sales by 30-40 per cent.” So how does he plan to combat it?
“There is always sale in our shops ranging from 10-35 percent. Moreover, we try to be as reasonable with our prices allowing customers to sometimes bargain. We also launch schemes like buy-one-get-one-free accompanied by fresh stocks weekly.”
Exporting from cities like Indore, Mumbai, Jaipur, Tripura, and Delhi, the shop makes approx. revenues of Rs 25000 per day.
Rajesh, the owner of B.K. Enterprises, who have been in the business of selling home appliances for the last 40 years, says,
“If you ask us, yes we are threatened and losing out on our business increasingly. Why we don’t want to partner with online stores is because margins are pretty less and the rejections for products we send are really high. Moreover, there are companies which are supplying cheaper Chinese products on the platform.”
On asking him, what he is planning to do to get more customers on Diwali, he says,
“We are trying to put up banners and trying to educate customers more about the benefits of offline shopping. We are also trying to add home need products like ladders and lighting products which we get a lot of queries for.”
While there are still segments in fashion where business owners are really worried, Mayur Ashra who owns the All Silk Saree Emporium and is in the business for 48 years, says,
“Unlike online stores we don’t have discounts. Silk is such a thing you have to touch and feel to understand the quality. Like always, we will rely on word of mouth marketing for our sales this festive season.”
However, we didn’t stop there, we went ahead to ask the fellow shoppers on Commercial Street to understand what they think about these retail wars.
Voicing their views about the ‘Big Billion Sale’ and why they would shop at Commercial Street, Keerthana and Rachita tell us that they prefer offline shopping for the bargaining.
“Online stores don’t provide that option. Moreover for women, apparel size is an issue. From an offline retailer, you get a customized experience where there is tons of variety to pick from, and alterations can be done in cases of a misfit. Hands down we would like to shop on Commercial Street rather than going to an e-store because of the competitive pricing these offline stores bring. But we think the e-stores have upped their game as compared to last year, which was a complete fail.”
While hurrying up to their next store, we caught up with Megha and Warisha, who are students and shared a similar opinion,
“We prefer e-stores mostly for buying electronic items. During festive seasons and these big billion sales, we obviously prefer shopping online. However, on any given day we shop more from offline stores. While shopping for women’s apparels online, you can’t really judge the quality of the fabric. Sometimes what we see can turn out to be completely different when you get it. Offline shopping definitely provides more options and is an experience by itself. It can be boring to shop online sometimes! ”
While women think bargaining and the customized experience make them shop offline more, what is it that drives men? Online or offline?
Valentino Barboz, who works as an Engineer Officer tells us,
“They’ve their own pros and cons. While offline provides a better experience and more choices, online shopping provides some great deals. I think what offline showrooms should do is come out with better deals like these e-stores do.”
Reportedly, close to 85 per cent of the market presently is offline in India Studies by marketsandresearch shows that consumers switch between online and offline before making purchase decisions. Certain categories like mobile phones, majority customers follow up their online purchase with a visit to the store for accessing related services like data transfer, screen protection etc.
In a bid to touch this issue, Snapdeal recently launched its omni-channel platform. The platform intends to create an ecosystem of leading brands, large format retailers (LFRs), small businesses and technology startups. The Mobile Store, Michelin, Shoppers Stop, and Luminous will be the first few partners for Snapdeal’s omni-channel initiative.
With retail wars being raged by multiple competitors in these spaces of offline and online, it is clear that both sectors need to join hands to usher the next phase of growth in the ecosystem.