Online vs Offline Power Panel at Internet Retail Expo 2013
Considering the momentum with which online retail is growing, it is a matter of curiosity to understand where is this channel heading in future. Also with growing consumer adoption and retail participation it is important to know how this medium would pan out in comparison to other existing channels of retailing. This Panel discussion at Internet Retail Expo 2013 tried to answer big question of Offline Vs Online Retailing. Panel Discussion was moderated by Rajesh Sawhney, Founder , GSF Superangels and other panelist included Bijou Kurien, President & CE, Lifestyle at Reliance Retail Ltd; Dev Khare, Venture investor, Lightspeed Venture Partners, India; Manoj Chandra, Founder & CEO, AllSchoolStuff.com; Praveen Sinha, Managing Director and Co-founder, Jabong.com; Rajesh S Nahar, CEO, Cbazaar.com and Sandeep Aggarwal, Founder & CEO, Shopclues.com. It’s not that in totality online be bigger than offline but can it be bigger in category, some shapes, in a niche, in 5 or 10 years?
Sandeep: It won’t be bigger, because we have seen in other countries it could have become bigger, it has not become, US has 6% penetration in ecommerce, china has 14%, India has 0.1% and that 0.1% can be 6% by 2020 and that can create INR 3 lakh crore or 60Bn US dollar by 2020. You cannot buy few things online without touch & feel there are companies giving that opportunity but let’s see sustainability of that. Many things can’t be sold online many things are time & location sensitive.
Praveen: I don’t see online be the major players compared to the offline in the retail space, few challenges in terms of feel and fit factor, as there is a huge learning and technology development to happen to ensure that touch and feel factor is totally eliminated. The numbers tell itself it’s not even 1% today, I don’t assume it to be 10-15% in another 5-10 years. Even if you achieve that, it would be a great achievement. Thirdly, ecommerce has a fundamental design principle for example delivery, etc, lot of product in order to be delivered to the end customer requires the business angle to it, so if it doesn’t make sense I think it will ever come as a product offering on the website, it might start as a product exercise but it might fail. As a community buy online hasn’t reached a stage where a community buying has achieved which I think we will achieve but it will take another few years.
Rajesh Nahar: Online is a channel for any offline establishment to sell the merchandise, online is a channel which any offline should look as an upcoming channel and there is going to be big opportunity in this particular channel and if the establishment misses out this opportunity that could be big threat for going forward. On a consumer point of view this channel will be a great driver for discovery, so if the establishment is not available online, time with the consumer has got is divided on the traditional and new media, if the merchants and the establishments are present in various forms this gives advantage for the establishments in the long run.
Bijou Kurien: It’s not about online or offline it’s about how you serve the customer and if you really look at it customers don’t differentiate between offline or online saying that I will buy this online or offline. What we need to remember that it’s a large market you have different customer segment across different population stature, age, city, products categories, etc. We cannot put definition on customer that he will buy online or offline, as long as we understand that it’s a retail business, as long as we understand we have customer in front of us, and as long as we understand customer has a need, at the end of the day a combination of factors ranging from service, cost, speed, etc; whoever be able to provide the better deal will certainly will be the winner. It doesn’t mean if you are a online player it guaranteed success, even if you are offline player it doesn’t guarantee success. What we need to understand is that we have to have a very good understanding of the customer; we are able to then focus on their needs we certainly will struggle in terms of serving the customer.
- In context of India, here the organized retail formation and the ecommerce is happening at the same time unlike West, Private Equity is not so excited about ecommerce, what’s happening here is context of Private Capital?
- There is a shift in business model to Marketplace, many say inventory models are not working out; unit economics are bad, Marketplace is a new sort of thing that has marketed to investors. How do you see this transition? What sense does the VC get about ecommerce sector and specifically about business model i.e. Marketplace? What’s the appetite like?
- Who is this customer? What is the value propositioning that ecommerce offers that the offline retailers cannot offer to that customer?
- Is the NRI customer market a scalable business?
- As there are Regulatory issues, unit economic issues and private equity company’s cold feet issues. How will the ecommerce be funded in India? Who will fund it?
- Should Offline Companies must go online?
- Ecommerce companies are selling in volumes, and creating market what’s the scope for branding, creating brands at ecommerce platform?
- Is there a potential for B2B ecommerce?