Retail versus e-tail

Apr 16 2014, 20:38 IST
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SummaryAs etailers require physical formats and physical retailers see a need to go online, new models will emerge

Technology, singularly, has been one of the biggest disruptive forces for the retail industry. It has given the shopper more than one channel to shop with, convenience of shopping at home, driven down costs and, most of all, shifted the centre of gravity of customer experience from the provider to the buyer. To say that the shopper today is well informed is understating the facts. While the retailer grapples with customer analytics, with the information overload, do the customers need an analytics tool themselves to process the information they have at hand.

The informed customers today research online, see and feel the product in store, and place the order online; in the process, driving the price of their ‘buy’ more than 40% than what they would have paid had they bought the product in-store. This has given rise to the term ‘showrooming’, and while even the biggest sceptics are not ringing the death knell of the physical stores, the cheese has clearly moved for this industry.

In the debate of retailing versus etailing, the truth today is somewhere in the middle. While etailers worldwide are a growing breed, it is also true that the etailers are increasing feeling the need of getting into physical formats be it small stores where customers can walk in, feel and see products and then order online, shopping walls, or lockers for convenient delivery. Amazon, eBay and Tesco being examples of that. On the other hand, retailers are upping the game by going the multi-channel route and we will see somewhere the line between etailing and retailing blur, and a new business model emerge for the industry.

To be able to capitalise on these trends, it’s important for the physical store retailers to understand the reasons behind the changing behaviours. According to PwC’s Global Multi-Channel survey, the top two reasons shoppers buy online is convenience, followed by cost. Online shopping gives them the convenience of shopping from home, doing so 24/7, and it also gives them the cost advantage.

On the other hand, people who shop in-store do so because they like to feel the product, get instant delivery and like personalised services. A large part of India shops in-store also because they do not trust the delivery system, are worried about data security, don’t own a credit card or don’t have a data connection. While with the penetration of data and credit services the last three reasons will

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