Why offline stores need to start taking their data seriously

Over the past few weeks, I have been on the road talking to various offline store owners about their use of technology, particularly around data, to improve the efficiency of their day-to-day operations . A lot of interesting insights came out of these conversations, which I will be sharing in this blog.

The offline segment, in itself, includes a plethora of sub -domains, but in this post, we will focus on offline retail stores. Offline retail stores are either company-owned or are run by individual owners. The company-owned stores, such as Croma, Reliance, Levi’s, etc., have strong marketing and tech teams behind their business, and more or less operate in a way similar to the e-commerce industry. Stores run by individual owners are where things gets really interesting. My conversations with them basically revolve around these two questions:

1. How do they manage their data (sales, customer, inventory, etc.)?
2. What kind of marketing channels do they use to promote their brand and to reach out to their customers ?

One reason why companies like Amazon and Flipkart have been doing well is the fact that they have very precise answers to the above-listed questions. They understand who their customersare and lay a lot of emphasison customer behaviour to target them accordingly. They believe in the value of data and have invested heavily in building strong data teams to derive insights from their raw data. This is one of the reasons why Big Data (and the whole Hadoop ecosystem) became so popular, and the most sought after IT job of 21st century was that of the Data Scientist.

Now is it possible for these individual store owners to start doing what Amazon is doing with its data? Well, the answer is obviously a big no, considering the expenses involved and the general mindset about using data to improve their sales, footfall or efficiency. Here are some of the interesting answers I got from these people when I posed those two questions to them:

• “We don't really store our data. Most of it is all verbal conversations and customers also don't ask for a bill or anything”
• “Why spend money on marketing, people know us very well, and directly come to our store”
• “We purchase email data from various vendors and email them directly”
• “I put all my customers’email addresses on a pen drive, and a guy from some ABCD company comes and collects the pen drive and sends them an email”
• “We print out some pamphlets and ask the newspaper guy to send these along with the newspapers. We also run our ads on cable TV”
• “We put a banner in front of our store whenever we have a sale. Generally that banner stays throughout the year because it attracts a lot of customers”
• “We know who all visit our store. Papa sits atthe billing counter, and he knows everyone”
• “We have downloaded Tally from torrent and it works pretty well for us. If you need, we can give you the software”

Most marketing experts would feel really bad for these people buying email datasets, completely unaware of the fact that their mails are landing in spam, but the silver lining here is that some people actually do think of email as a marketing tool. But the question is how effective is it? They are spending money, but not really getting anything out of it, or maybe it is helping them out, but they don't know how exactly. If we look at the newspaper pamphlet approach, one A4 color pamphlet costs around Rs. 8 a piece (after all, you get to know all these things when you have an early-stage startup) and slightly less, if done in bulk. So a thousand such pamphlets would roughly cost them around Rs 8,000. And the ground reality is that most of these are either completely ignored or used for collecting garbage from the floor.

The core point here is that a majority of these store owners are not using technology in a right way even though they are spending aplenty. This gives an opportunity to startups like ours, CustTap (custtap.com) , to bring them a step closer to technology by providing an easy-to-use platform at a price cheaper than the avenues they are used to. But this adoption is no easy task as this involves changing a traditional mindset, which most of these owners hold; but, if explained properly, a lot of them are willing to listen to you and maybe start experimenting. In today's era, when the e-commerce industry is killing their businesses, it becomes extremely important for them to understand their data and leverage it for improving their sales and building long-lasting customer relationships. Even though there are plenty of startups and established companies solving this problem for big retail chains, there is still a big gap when it comes to the smaller stores and that is where we come in.

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1. The above mentioned facts are based on my observations while interacting with around 100 odd vendors in Delhi and Bangalore. The picture might be completely different when we talk of Tier 2 cities and smaller towns where the penetration of Internet is not on par.
2. If you are an offline vendor, and this sounds exciting to you, please head over to our website , http://www.custtap.com, to get a better idea of our product or drop me a line at [email protected]

About the Author: 

Amar Parkash is the Founder of CustTap (custtap.com), a data analytics and marketing platform for offline stores. Amar has three-and-a -half years of experience in building data-centric products. Amar started his career with the payments team at Paypal. Before CustTap, he was leading the data platform at Goibibo.)