Author: Samarth Goyal, CTO and Co-founder of PoketShop
It came, it saw, it conquered – these legendary words provide the perfect summary description of how the e-commerce market took the world by storm. eCommerce identified the gaps in the offline retail structure such as higher pricing, inventory management issues, long queues/wait times etc and used them to carve out its niche within the industry. Many small and large scale offline retailers cried themselves hoarse over this gross invasion to their market dominion by online retailers who rode on the back of disruptive technology and innovative marketing strategies to grab a slice of the lucrative retail market pie. With the convenience associated with online shopping, anytime availability and heavily discounted rates, online retail commerce seemed to have sounded the death knell for the offline retail community; several stores, both large and small, announced closure due to their inability to make profits. The year was 2005, and offline retailers had consigned themselves to a slow, torturous demise.
Fast forward to 2015, and the predictions of market experts, industry specialists and trade analysts foretelling the decline of offline retail have largely proven to be as truthful as the Mayans prophesising the end of the world. Offline retail is very much alive and is stoutly taking the eCommerce bull by its horns. Offline retail accounts for more than 98 percent of the overall retail industry segment in India and is pegged to cross $1.244 in sales in the year 2018, marking an increase of more than $400 billion on the $818 billion dollars predicted for the 2015 fiscal.In comparison, the e-commerce industry is only expected to grow by about $10 billion. But as offline retail continues to confound experts and laymen alike, one cannot help but wonder at what force is behind its unexpected rally.
The answer lies in one word – evolution. When the eCommerce boom was revolutionizing the way business would be conducted forever, offline market was faced with a situation that had two choices – it could either re-engineer its approach in order to keep up with the new kid on the block, or face the inevitable. Not much of a choice, come to think of it. An in-depth, painstakingly detailed analysis was undertaken to evaluate the reasons behind eCommerce’s meteoric rise.
One of the most recognizable factors that drove the eCommerce boom was the convenience factor offered by online shopping as compared to the traditional shopping experience – one could browse and shop for anything at any given time of the day without actually going anywhere. Add to it the fact that most online shopping portals offered products from well-known brands at hugely discounted rates, and any consumer would naturally prefer the online mode of shopping. While offline retailers ran their own discounts and flash sales, eCommerce kept having the edge due to its higher visibility quotient. There was an urgent need to leverage technology to aid the offline retail market in India. SMS and email communication had been utilised by offline retailers, but the practice in India was largely restricted to well-established chains. Most of the unorganized retail sector, which accounts for nearly 91 percent of India’s retail space, either lacked the awareness or the means to utilise the digital medium to connect with its tech-savvy consumer base.
This was where digital retail aggregators came to the rescue. By offering an online platform to all small, medium and large offline businesses, they provided what had been sorely missing so far to the latter – a digital presence. Leveraging the aggregator’s greater consumer connect and hybrid online/mobile approach, retailers could now reach out to consumers in their vicinity with the latest offerings, deals, promotions, sales and discounts that were in place. A factor that worked in the favor of offline businesses was the fact that Indian consumers have always, and will always, like to feel and try any product before purchase. Adding to it was the trust factor associated with the brick-and-mortar outlet’s physical presence and accompanying trust factor as opposed to eCommerce’s anonymous transaction. By adapting a new approach and consolidating its strengths, offline retail capitalized where online retail was lacking in order to keep itself relevant with the changing needs of its consumer base.
Some of the startups into this field are Poketshop, Niffler, Crown-it, Shopsity, Zopper and others.
All said and done, both online and offline retail segments are set to thrive in India owing to their consumers’ increased spending power. Today, offline retail is once more growing at a much faster rate, and the decade-old predictions are no longer relevant. While eCommerce initially did threaten to topple the traditional retail industry with its disruptive approach, the offline businesses seem to have leveraged the digital medium and the superior customer connect it offers to rally back magnificently and prove that while retail has moved back to an offline channel, it has not moved back in time.
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