While the uptake of retail in the digital space remains limited to just a few players at present, such as the travel vertical or service providers like group buying sites, a few companies have been able to establish a role for themselves in the online space, such as Flipkart.
One of the new trends in recent times though is the entry of established brands into the digital space. While brands have had a long time to establish themselves in the brick and mortar world, stepping into digital for them is no different than for any start-up. The challenges might be different, but there are a lot of issues to resolve.
Anurag Gupta, MD, DGM India, felt that were are heading to an inflection point, which was when the big brands would take a more positive interest in the digital space. “There are 3 lakh tickets sold on IRCTC every day. Every day, 50,000 people are flying using travel portals. Flipkart, Ferns N Petals, deal sites and other e-commerce ventures are driving thousands of transactions daily. The mindset of sellers is now moving towards growth in the online space as well and we can only expect growth in the long term.”
The key is to not see the two as competition, but to realise that increasing a brand’s online presence and e-commerce store can also help drive growth in their offline business. Bata has seen this happen in the online retail space with their Bata Home Service. The website offers a large catalogue, which means that they are never in a position where they are unable to show customers a design due to restriction on the physical space of a store, and if there is demand for a product, they are able to get it to the customer.
Manoj Chandra, VP - Marketing, Bata India, said, “Footwear is one category which has seen good traction and has made a foothold for itself in the Indian scenario. At Bata, we have seen that the volume and the value of online transactions are growing, and we are using the online space partly to market our products and partly to sell them.” Illustrating how their offline and online inventory could be complementary, he explained that sometimes when one went to a store, a particular shoe might not available in one’s size or in the colour one wanted. This would never be an issue. So, in that way online helps offline. “Similarly, you order a shoe online, and you order the wrong size. Just go to the nearest Bata showroom and we’ll change it for you, so offline is helping online,” he added.
Having both components creates a greater sense of trust and value to the customer. But value can come in many forms, including longstanding trust in a brand. This is particularly true in the fashion segment, where the cost of an item will have little relation to the cost involved in making it. The value comes in terms such as craftsmanship, which are far harder to itemise.
Puneet Nanda, Director of Satya Paul, said, “Online businesses need to offer quality, value and convenience. We are a fairly unique case, because we see a conversion rate of around 20 per cent, and an average ticket value of around Rs 25,000; industry standards are less than 1 per cent, and less than Rs 500. We are able to manage through a clear vision of providing the customer value in a niche market. We are not making a thousand or a hundred sales. But each sale is accompanied with a promise of quality and of value.”
“Building a brand online is a unique challenge, different from your existing brand, and the Internet marketplace bombards the user with so much choice that consumer loyalty becomes a thing of the past,” Nanda said, adding, “So how do you build long term links? You need to keep innovating, even more than in the offline space.” If you are an established brand who just rests on your laurels, creating a store and then just expecting people to show up, clearly that won’t work.
In the case of Bata though, the learning is a little simpler. According to Chandra, customers cared about brands and not the channels. “Online has some specific advantages – it removes the supply and demand gap, and adds a lot of convenience. Our focus has been convenience, not discounts, and we are not trying to get people to buy online instead of our store. In fact, we see the store as a key touchpoint with the customer, and want to bring the online experience into the store.”