Off­line Do­ing bet­ter than On­line

Perfect Sourcing - - Cover Story -

That on­line busi­nesses are grow­ing faster than off­line is not com­pletely true as stores which are work­ing us­ing both the medi­ums ob­serve that bricks gen­er­ate higher con­ver­sion rates i.e., the per­cent­age of pur­chases by store/site vis­i­tors is more than pur­chases by on­line click­ers.

If com­pared on­line and off­line, the mar­gins in on­line mode are lower as com­pared to off­line, as fac­tors like ship­ping and han­dling charges and the costs as­so­ci­ated with in­creased re­turns eat into mar­gins.

An­other chal­lenge for on­line re­tail­ing is the in­creas­ing in­ter­est of young con­sumers opt­ing for leisure shop­ping. Ac­cord­ing to Cold­well Banker Richard El­lis (CBRE), mil­len­ni­als glob­ally (70%) pre­fer brick-and-mor­tar re­tail stores.

In the US, over 77% of Gen Z, con­sumers born after the mid-1990s find brick-and-mor­tar as a bet­ter op­tion for shop­ping, ac­cord­ing to Ac­cen­ture re­search. The re­search also out­lines that mil­len­ni­als have dis­placed baby boomers as the big­gest buy­ing group in the US at around 80 mn and spend ap­prox­i­mately $600 bil­lion each year.

Mean­while, Gen­er­a­tion Z is set to reach 2.6 bil­lion by 2020, with $44 bil­lion in buy­ing power, ac­cord­ing to a study by IBM and the Na­tional Re­tail Fed­er­a­tion.

Brick mer­chants are buy­ing click mer­chants be­cause on­line only is not a vi­able re­tail model, ac­cord­ing to “The Death of Pure­play Re­tail,” a re­port from dig­i­tal think tank L2. For one, “walk in traf­fic doesn’t ex­ist on­line,” while stores can gen­er­ate or­ganic traf­fic.

Sens­ing the same trend, many on­line re­tail­ers are now in­vest­ing in the off­line mode also. Ama­zon, Warby Parker and many more fall into this cat­e­gory.

Mean­while, Gen­er­a­tion Z is set to reach 2.6 bil­lion by 2020, with $44 bil­lion in buy­ing power, ac­cord­ing to a study by IBM and the Na­tional Re­tail Fed­er­a­tion.

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