E-commerce companies take omni channel route to boost sales; open brick-and-mortar stores to engage directly with customers
Their journey may have started in the virtual world, but today many an e-commerce company has an offline presence thanks to the network of retail outlets carefully built by them. So from FabFurnish and HealthKart which operate four stores each, to Lenskart which runs 25 stores in 35 cities to baby products portal Firstcry which has 100 stores across 82 cities and towns, many e-tailers are following a new business model called omni channel, also known as multi-channel retailing.
“At a time when e-commerce is gaining acceptance amongst consumers in India, the omni-channel model which is basically multi-channel retailing allows e-commerce companies involved in selling slightly different types of products gain consumer confidence,” says Nitin Bawankule, director, e-commerce and online classifieds at Google India.
With the store size ranging from 300 sq feet to 450 sq feet, e-commerce companies get the opportunity to showcase their products to consumers. “Since we sell furniture online, many a time customers visit the stores to get a better understanding on the quality of products, services, etc. These stores help in adding the touch-and-feel factor which is missing in the e-commerce business,” said Vikram Chopra, founder and CEO of Fabfurnish.
Agrees Sameer Maheshwari, managing director and co-founder, HealthKart. “These stores allow us to provide value added services to consumers. For instance, as we sell health products and run various programmes such as weight loss, managing and controlling diabetes, with the stores we are able to set up face-to-face interactions with counsellors,” said Maheshwari.
Interestingly, what started as a way to win the consumer’s heart is gradually emerging as yet another business model.
According to industry estimates, e-commerce companies currently generate about 5-10% of sales from their stores.
According to Maheshwari, vertical niche players are bound to look for a business model which is different from e-commerce biggies such as Flipkart, Amazon and Snapdeal. “Consumers are free to buy from the website as well as the stores. With the introduction of the stores the conversion rate has increased. For example, if earlier a customer left her selected product in the wishlist/basket and exited the site, today after one visit to our store, the consumer either orders for the same product either at the store or online,” said Chopra of FabFurnish.
Moreover, even newer formats are emerging in the omni-channel model. For example, FirstCry follows the ‘kiosk innovation model’, where buyers can browse through the inventory at a kiosk installed at the store and then order online. This is part of its omni-channel strategy to tap small towns. “As 90% of transactions happen offline, the idea is to inculcate the habit of buying from online retailers. So these kiosks are set up at the stores from where one easily place an order.” said Supam Maheshwari, CEO and founder, Firstcry.com.
Google’s Bawankule says the time is ripe for e-commerce companies to explore various business models. “The e-commerce category is witnessing the entry of all kinds of models whether it is about Amazon trying to forge partnership with retailers such as Future Group, Shoppers Stop or, Lifestyle to sell their products online, or Jabong beginning its ‘Next-Door’ service where customers can pick up their order at the nearest coffee shop, petrol station or tour operator,” he added.
“As 90% of sALES IN SMALL TOWNS happen offline, the idea is to inculcate the habit of buying from online retailers. SO WE HAVE KIOSKS IN THE STORES.”Supam Maheshwari, Chief creative officer,CEO and founder, Firstcry
“if earlier an online customer left her selection in the wishlist and exited, today after one visit to our store, she orders for the same product either at the store or online.”Vikram Chopra, Founder & CEO, FabFurnish