E-commerce players bet on offline presence

According to market sources, in 2014 over 70% of e-commerce website-based transactions came from the 10 largest cities of India.

In February this year Amazon grabbed the headlines by announcing an offline store in Manhattan. Amazon may have realised the need for an offline store now, but several online players in India have been acquiring an offline presence for long.

Furniture portal Pepperfry, according to JLL India, became the latest e-commerce player to go hybrid after it leased 1,800 sq ft space at Linking Road in Mumbai. "For us, offline stores are part of our marketing campaign and these will be more of experience centres," said Ambreesh Murty, co-founder and CEO, Pepperfry. The company plans to have eight stores by the end of this year.

Among the early players that had offline presence as part of their growth strategy was Firstcry, an online portal for babies and kids. The company has 124 offline stores, which it intends to increase to 200 by January.

"We are opening 10-15 stores a month. We always wanted to be present at every touch point. Within six months of our operations we had started building our offline presence and now we also have a mobile app for those who want to shop on the go," said Anuj Jain, senior vice-president, marketing, Firstcry.

Firstcry has integrated three platforms to understand buyers. "It allows us to map customer behaviour. We have a larger presence in Tier-II and Tier-III cities," added Jain.

"The biggest nightmare for an online seller is to deal with a shopping cart abandonment rate of 70-80 per cent. The sweet spot is to be in a middle zone where online sellers connect with customers and also promote their products through multiple avenues," said Anuj Puri, chairman and country head at JLL India.

The trend to have offline stores also highlights the need to have access to more customers. According to market sources, in 2014 over 70 per cent of e-commerce website-based transactions came from the 10 largest cities of India. The vast majority of transactions, particularly in Tier II cities and beyond, happens in physical stores.

"Having an offline store adds to a bunch of other parameters such as building trust and awareness about products and the company," added Kashyap Vadapalli, chief marketing officer, Pepperfry.

Lenskart has opened stores in malls to connect with customers. Freecultr, an online fashion brand, is also moving into the physical space.

Murty said, "For one outdoor campaign in a city like Bengaluru the marketing spending for a month is Rs 50 lakh. Whereas to set up an experience centre we spend Rs 40 lakh annually."

RETAIL PUSH

• Online portal Firstcry has 124 offline stores and it plans to increase it to 200 by January 2016
   
• Lenskart has opened stores in malls to connect with customers
   
• Online fashion brand Freecultr is also moving into physical space
   
• In 2014, over 70 per cent of online transactions came from top 10 cities. The vast majority of transactions still take place in stores