By Asmita Dey
Given that only 3% shopping in India is done online, e-commerce companies are expected to intensify their competition against brick-and-mortar stores and strengthen their multi-channel strategies this year, market research firm RedSeer Consulting notes in a report.
The report states that as of 2018, online grocery held less than 1% of the $500-billion grocery market in India, online baby care comprises a mere 3.5% of the over $22 billion pan-India market, while online furniture and beauty and personal care segment forms 3% each of the $16-billion and $15-billion domestic market, respectively.
E-commerce players who expanded offline via franchise model are likely to focus on improving customer experience. “When you set up franchise models and expand it aggressively, often it may end up without any tight control on user experience,” an analyst at the firm said, adding, “Existing players have to pull up their socks and improve the franchise experience.
One way to do that would be to shut stores that do not see considerable footfall. The online market is very under-penetrated. You cannot have a purely online strategy to grow fast for the next few years.”
Faridabad-based eyewear retailer Lenskart operates over 450 offline stores on the franchise model. Pune-based babycare retailer Firstcry runs 282 stores on the same business model. Analysts at EY note that around 40%-45% of Firstcry’s business comes offline, while 55%-60% of business is online.
“Growth of e-commerce has to be omni-channel. Firstcry is a franchising-only model now going ahead. They are seeing fair amount of growth from the franchise stores. Franchise partner selection is an important part for all these brands because they are looking to hire partners who can invest a certain amount of capital,” said Ankur Pahwa, partner and national leader, e-commerce and consumer internet, at EY. “Customer experience can suffer because there is no unified customer experience that people will get to see across the stores. There are challenges but brands are making sure that investments are made available in training people.” Going ahead, Pahwa expects many brands to shift to ‘manchise’ (managed franchise) model to improve customer experience.
The report says players who have already had successful stints with experience stores will likely scale up focusing on ‘specific category and locational niches’ this year. Furniture retailer Pepperfry expanded to over 35 experience store outlets in 2018, which drove customer trials and adoption and helped in notching stronger revenue growth. Pepperfry’s revenue rose to `128.51 crore in FY18 from `114.98 crore in FY17. Bengaluru-based