De­cod­ing the on­line, off­line shop­per

Point of Purchase - - CONTENTS - Fairy Dharawat

The new age shop­per is a highly chal­leng­ing crea­ture. With an ar­ray of op­tions avail­able in terms of prod­ucts, brands and medi­ums of shop­ping, her buy­ing be­hav­iour and pat­terns can present many in­ter­est­ing pos­si­bil­i­ties to a mar­keter. In to­day’s e-en­abled shop­ping en­vi­ron­ment, the dy­nam­ics are even more strik­ing. Point of Pur­chase brings to you a de­tailed re­port on the new age shop­pers and their fling with the on­line and off­line mar­kets and how they have spawned new trends as some on­line re­tail­ers share their in­puts on the new age shop­per, e-shop­ping, and their im­pact on the brick and mor­tar re­tail in­dus­try. Read on... From shop­ping for books, gifts and cds to gourmet cheese, in­ter­na­tional fruits and veg­eta­bles; on­line sell­ing has seen re­mark­able changes in the world of shop­ping. It is pretty ob­vi­ous that the on­line in­dus­try is boom­ing, with strong play­ers in the re­tail in­dus­try al­ready seek­ing to lever­age the huge po­ten­tial this medium holds. Though in In­dia the ac­cel­er­a­tion of on­line shop­ping is com­par­a­tively less com­pared to the in­ter­na­tional trend, it has never the less gripped the In­dian con­sumer no less. This new age shop­per is short on time but not short on money. This is one of the pri­mary rea­sons for the emer­gence of on­line mar­ket. At the same time the ever evolv­ing retailing en­vi­ron­ment has helped the shop­per make de­ci­sions based not only on qual­ity and price but also on value and ser­vice. So where does all this leave the off­line busi­ness? Even though brick and mor­tar re­tail­ers share a loyal cus­tomer base, their don­ning an on­line avatar speaks for it­self about the chang­ing face of shop­ping on­line. Says, to K Vaitheeswaran, Founder and CEO, In­dia Plaza a lead­ing In­dian e-com­merce player, “To­day, most of our cus­tomers are work­ing pro­fes­sion­als over the 35 years. We de­scribe them as the money-rich-and-time-poor class who are look­ing for se­lec­tion, pric­ing and con­ve­nience. Over time more and more con­sumers will start shop­ping on­line. Hav­ing said this, most shop­pers will shop both on­line and off­line for a long time to come.” And then there is also the time-strapped In­dian youth who would not shy away from chos­ing the e medium even when it comes to buy­ing clothes; they would rather pre­fer to get it all at the touch of a but­ton rather than com­mut­ing all the way to do their shop­ping since your favourite branded jeans is now just a click away. The avail­abil­ity of pre­mium on­line ser­vices has only ac­cel­er­ated this trend. Ac­cord­ing to Ashutosh Lawa­nia of Myn­tra, an on­line ap­parel brand, “To­day’s young shop­pers are busy try­ing to build a ca­reer for them­selves while not com­pro­mis­ing on qual­ity of life. While they do like to shop off­line, they pre­fer on­line sites for their con­ve­niences such as Cash on de­liv­ery, EMI fa­cil­ity, 24/7 sup­port, 30 day re­turns etc.” So how ex­actly is on­line shop­per dif­fer­ent from off­line shop­per? Are they lazy? Are they price sen­si­tive? Are they finicky? Are they time-con­strained? Well, it seems they are all of these and more. Talk­ing about this says K Vaitheeswaran of In­dia Plaza, “The off­line shop­per shops in the neigh­bour­hood, and in some cases she goes to des­ti­na­tion stores even if it is a bit far away. Off­line shop­pers are used to brows­ing through lim­ited se­lec­tion and choos­ing items af­ter phys­i­cally ver­i­fy­ing the same. Pric­ing is im­por­tant but the num­ber of deals is lim­ited to off sea­son or clear­ance sales. Whereas the on­line shop­per is look­ing for mas­sive se­lec­tion, low prices and deals right through the year. Con­ve­nience of home de­liv­ery is an im­por­tant pa­ram­e­ter. She will shop in any store any­where in the world as long as they de­liver to her doorsteps.” Adding on the same vein, Srini­vas Chari from Xer­ago Di­rect Mar­ket­ing so­lu­tions ex­plains, “Price is an im­por­tant fac­tor shop­pers have in mind and on­line shop­pers are fre­quent spenders though on low bud­gets. The off­line shop­pers are ex­pe­ri­ence-led and are ready to spend that ex­tra bit of time and money to reach greater sat­is­fac­tion lev­els. Sev­eral of them even use on­line modes to aid them in de­ci­sion­mak­ing but the fi­nal call al­ways hap­pens at the store. There fre­quency of spends may be lesser and bud­gets much higher.” Well, on­line and off­line shop­pers may vary in many as­pects but when it comes to ba­sic premises – what de­ter­mines a shop­per to shop - price, ser­vice and choice are some of the things shop­pers go look­ing for while shop­ping ir­re­spec­tive of whether they are on­line or off­line shop­pers. Well armed with these observations, many new on­line play­ers have en­tered the re­tail in­dus­try and the new tribe of shop­per has also set in mo­tion many new trends. For ex­am­ple, in the West there are even web­sites ded­i­cated to den­tal check­ups com­plete with a den­tist on the other side of com­puter pro­vid­ing tests! Though In­dia has yet to take such a leap, on­line trad­ing has in­deed helped many save time when it comes to many es­sen­tial ser­vices. Take for ex­am­ple the area of bus tick­et­ing which has al­ways been a cum­ber­some af­fair with long lines of queues. Well if re­cent trends are to be be­lieved, there is a huge par­a­digm shift the tick­et­ing in­dus­try is un­der­go­ing. On­line bus tick­et­ing has evolved with num­ber of peo­ple pre­fer­ring to book tick­ets on­line rather than off­line con­tribut­ing to an ex­ten­sive growth in the in­dus­try. Says Arun Athi­ap­pan Co-Founder and CEO of Ticket Goose On­line, an e bus tick­et­ing com­pany, talk­ing about the

over­all elec­tronic busi­ness, “On­line busi­nesses are silently driv­ing a so­cial rev­o­lu­tion. They are shift­ing the power of choice to the cus­tomer. Never be­fore was the cus­tomer able to choose from so many stores sit­ting at his home. The cus­tomers can now search, find and or­der the prod­ucts that will ex­actly suit them in­stead of hav­ing to choose from mass man­u­fac­tured prod­ucts that were the clos­est to their needs. Busi­nesses to­day churn out prod­ucts which are in de­mand in fairly large num­bers and ig­nore the needs of the rest. This tyranny of ma­jor­ity is set to end with on­line busi­nesses be­ing able to of­fer a large va­ri­ety with­out the con­straint of shelf space. For e.g., when one searches for tick­ets from Chen­nai to Madu­rai, tick­ to­day lists more than 70 buses, a choice that would not have been pos­si­ble in the off­line model. Cus­tom man­u­fac­ture will be pos­si­ble with on­line stores gath­er­ing or­ders and mak­ing prod­ucts to or­der. In all, the face of com­merce is un­der­go­ing an ir­rev­o­ca­ble change and the cus­tomer as­cend­ing the throne to be­come the true king of the e-Com­merce world.” So what do the on­line busi­nesses do to en­sure that they re­tain a loyal cus­tomer base and what does it en­tail for the off­line re­tailer? Well, to be­gin with, an on­line busi­ness en­sures that the shop­per not only con­nects with the brand, but also pro­vides them com­fort of oper­at­ing at their con­ve­nience. Speak­ing on the same lines and how it will fur­ther move ahead, says K Vaitheeswaran “Go­ing for­ward, con­sumers will de­mand in­te­grated chan­nels from re­tail­ers and off­line re­tail­ers will have no choice but to go on­line. I be­lieve that for a long time both the chan­nels will thrive to­gether.” Adds he, “Most of the off­line re­tail­ers who dive into e-com­merce suf­fer from this myth that all they need is a web­site and cus­tomers will trans­act from them. This is not true at all. A lot of hard work and anal­y­sis is re­quired to gain the trust of cus­tomers and build an on­line brand. We have done this suc­cess­fully and that is why our web­site sales and traf­fic con­tin­ues to grow sig­nif­i­cantly. Off­line re­tail­ers also pro­mote their store but re­strict it to phys­i­cal pro­mos. They now have to start un­der­stand­ing the dig­i­tal medium be­fore they can suc­ceed.” Well, given all this, one can­not still ig­nore the ad­van­tage off­line stores have in com­par­i­son to on­line stores. Vaitheeswaran adds, “Off­line busi­nesses have stor­ing and ware­hous­ing fa­cil­i­ties, which is the rea­son why I be­lieve that the tip­ping point for e-com­merce in In­dia will hap­pen when off­line re­tail­ers go on­line. The big chal­lenge for on­line re­tail­ers is to pro­vide great cus­tomer ex­pe­ri­ence. They can do this by car­ry­ing in­ven­tory but it kills the fi­nan­cial model for on­line re­tail. Off­line re­tail­ers will have the great ad­van­tage of hav­ing in­ven­tory with­out ad­di­tional over­heads.” On the other hand, Mr. Ashutosh Lawa­nia from Myn­tra be­lieves, “Off­line is a cash in­ten­sive model as re­tail­ers need to in­vest in real es­tate and du­pli­cate in­ven­tory while on­line model works with one face for the en­tire na­tion with a cen­tral­ized ware­house and setup at the back­end. If off­line wants to be fully suc­cess­ful in the on­line space they need to have a strong tech­no­log­i­cal ex­per­tise to sup­port their in­ter­face. On­line re­tail is a dif­fer­ent mar­ket al­to­gether and re­quires greater un­der­stand­ing of the buy­ing be­hav­ior and pat­terns. A ded­i­cated cus­tomer con­nects team and ro­bust sup­ply chain is es­sen­tial to be suc­cess­ful in this seg­ment.” Com­ment­ing on the influence on­line busi­ness has on off­line busi­ness, he adds, “On­line re­tail has been rapidly grow­ing and is expected to be a $2 bil­lion busi­ness by 2015. This size cou­pled with the vast reach the plat­form pro­vides has at­tracted off­line busi­ness to ei­ther part­ner with pop­u­lar ecom­merce site or set up their own ecom­merce por­tal.” But how vi­able is it to have both on­line and off­line busi­ness? What reper­cus­sions a busi­ness may have? Can they thrive to­gether and ex­clu­sively help each other? Shar­ing in brief on pros and cons, Arun Athi­ap­pan of Ticket Goose On­line says, “The big­gest hur­dle for off­line busi­nesses ven­tur­ing into on­line space is tech­nol­ogy. Pure play on­line busi­nesses are ex­tremely well versed with tech­nol­ogy. Their web por­tals be­ing the only in­ter­face with their cus­tomers, they are com­pletely fo­cused on pro­vid­ing the best user ex­pe­ri­ence. Off­line busi­nesses on the other hand tend to have an on­line pres­ence just for the sake of es­tab­lish­ing their on­line iden­tity. Busi­nesses can es­cape this pit­fall if they are will­ing to spin off their on­line division as a sep­a­rate division with their profit cen­ters.” He ex­plains fur­ther, “Off­line stores spe­cial­ize in sup­ply side lo­gis­tics while on­line stores also need to fo­cus on de­liv­ery lo­gis­tics. It is easy for prod­ucts that can be de­liv­ered over the web like tick­ets, mu­sic, movies, eBooks etc... Phys­i­cal goods need a vast de­liv­ery net­work. Un­like off­line stores, com­pe­ti­tion is just a mouse click away in the on­line mar­ket. There are por­tals which can eas­ily com­pare and con­trast the of­fer­ings from dif­fer­ent stores en­abling the user to make an in­formed choice.” Speak­ing on whether on­line and off­line busi­ness can thrive to­gether, says Srini­vas Chari from Xer­ago says, “In the present day sce­nario we could safely say that off­line and on­line are not al­ways mu­tu­ally ex­clu­sive. With even off­line busi­ness adopt­ing on­line mar­ket­ing ini­tia­tives as part of their mar­ket­ing pro­grams, you could say a ma­jor part of the de­ci­sion-mak­ing and en­gage­ment hap­pens be­fore they en­ter the brick and mor­tar store.” Ac­cord­ing to Ashutosh Lawa­nia from Myn­tra it works well to­gether for some seg­ments, “Yes, the fash­ion and life­style seg­ment is a $50 bil­lion mar­ket which pro­vides enough room for both off­line and on­line to co-ex­ist. We be­lieve that cus­tomer will ben­e­fit the most with a host of con­ve­niences and op­tions to choose from.” And those who quickly dis­miss the on­line busi­ness as a pass­ing whiff had bet­ter watch out for it is here to stay. At the same time, off­line busi­ness shares a very strong part of loy­alty which is hard to repli­cate. Off­line shop­ping pro­vides that very im­por­tant con­nect which cre­ates a bond. So, in con­clu­sion one can say that a syn­chro­nised re­la­tion­ship be­tween on­line and off­line busi­ness en­sures that the shop­per of to­day en­joys a com­plete shop­ping ex­pe­ri­ence. As Srini­vas Chari from Xer­ago pre­dicts, “shop­per of to­mor­row is in for Con­ve­nience, Choice, and Com­fort.” So as the cus­tomer truly re­tains his po­si­tion as the ‘king’, re­tail­ers will have to adopt more cre­ative ways of lever­ag­ing both the off­line and on­line mod­els, and the sooner they do it, the bet­ter

Ashutosh Lawa­nia Co-founder and Head - Sales & Mar­ket­ing, Myn­

K Vaitheeswaran Founder & CEO, In­dia Plaza

Arun Athi­ap­pan Co-Founder & CEO Ticket Goose On­line

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