Y ou’re looking at a product online, you’re a click away from billing but a nagging sensation stops you from buying it. You decide to put the purchase on hold. Sure, you can return the product but you, being a regular in the online buying scenario, do not consider returns as a novelty anymore or probably not worth even the minimal effort. In essence, the brand has failed to make a sale simply because it wasn’t physically present to speak for itself and convince the consumer about the merits of the product. Online retailers, for some years now, have realised that there is no such thing as an ‘online-only’ or an ‘offline-only’ consumer. At the core of why a consumer buys what she does, will be the product experience. This is where it ceases to be a debate between brick-and-mortar stores versus online retail and the conversation shifts to the experience economy.
An increasing number of online portals have been setting up offline stores to allow consumers to experience products before they come to a purchase decision. FirstCry.com was one of the early adopters in India in this regard. It reportedly has over 150 offline stores pan India spread across Tier I, II and III cities. The brand is looking to bring that number up to 700 over the next three to four years. Brands that have gone down a similar route include Pepperfry, Lenskart, FabFurnish, YepMe, Flipkart, CaratLane and Snapdeal. Although it is still too early to comment on the feasibility of this new business model, it seems to bode well for the online players to cater to the offline consumer.
The offline majority
As per a Hansa Cequity report (August 2015) 74% of the 885 respondents surveyed subscribe to omni-channel buying behaviour. This is put in context as the Indian e-commerce market is supposed to hit the $100 billion mark in 2020. It becomes an issue of reach when an IAMAI-KPMG report pegs the number of internet users in India by 2017 to be over 500 million. The sheer size of the potential consumer pool makes it imperative for online retailers to use the opportunity as a means to not only build the brand offline but to simultaneously leverage the same to strengthen their online platforms.
Supam Maheshwari, CEO and founder, FirstCry.com, says, “While there is a great shift to online shopping, we can’t leave behind the chunk that still prefers offline shopping. Moreover when it comes to baby care products, parents and especially moms would prefer to touch and feel the products that they are selecting for their little ones.”
Consider YepMe.com, which is the latest etailer to launch its offline stores. Vivek Gaur, CEO and co-founder, YepMe.com acknowledges the limits of staying an online only brand. “Offline or experience stores help in increasing brand awareness. As a fashion brand, it helps us provide a design experience.
Additionally, the stores help us provide a 360 degree experience to people that are already online.” The best part, he states, is that because in a store people are willing to take a risk, the high ticket items start to move. That isn’t to say that the offline store would be the solution to move high ticket products off the shelves.
Take furniture for example. Pepperfry currently has six experience stores across India. Ashish Shah, founder and COO, Pepperfry, shares that the brand is spending Rs 8-15 lakh per month on a store. Whereas depending on the location, one hoarding would cost them anywhere between Rs 5-10 lakh, and at best it would help consumers to recollect the brand. Then, in comparison, an experience store for Pepperfry made more sense, he says. The company launched its first offline store in 2014. The stores, Shah elaborates, have helped in driving traffic to the online portal to the effect of contributing around 10-15% to total sales. FabFurnish was another brand which rolled out experience stores but now operates through vendor stores where it provides features such as ‘Available on Display’ and QR codes. ‘Available on Display’ is a tool that displays names and addresses of retailers selling a particular product in that city. Furthermore, by scanning the QR code tagged on the product in store, the customer can browse through associated looks and product reviews on the FabFurnish platform.
For YepMe.com, the decision to have stores was arrived at because even with advertising and marketing, the retailer felt a set of consumers was not being catered to. “Because we had used celebrities in our communication, the brand awareness was high but unfortunately since there are only three to four crore people who are online and buying, it meant that a lot of advertising that we were doing on TV was going to waste,” says Gaur.
The rub-off effect
It could perhaps be argued that an experience store compliments an online presence best when we’re speaking about select product categories. Lenskart, with over 100 stores across 66 cities, credits this to being a category issue. Peyush Bansal, founder and CEO, Lenskart, notes, “The fact that eyewear as a category is fairly complex, was one of the prime reasons for us to come up with offline stores and invest in further expanding presence. At Lenskart, we refer to our model as the ‘assisted e-commerce model’.” For the eyewear brand, this model is a means to garner trust for the products and also to remove apprehensions, if any, from the minds of consumers about buying eyewear online. The brand supplements the online and offline presence by providing services such as free trials and at-home eye check-up facilities.
The various touchpoints have brought in a varied profile of customers as compared to earlier, who now first try the product in stores and then purchase online.
Calvin John, VP — offline marketing, CaratLane.com notes that offline stores are a means to provide a ‘face’ to the brand. This is a spot that cannot be filled in by advertising. The brand currently has 12 stores in India. It started off with just having an experience store but by the time the second store opened, a decision was made to allow consumers to be able to purchase from the store. Its stores now house 70% samples and 30% pieces that are available for purchase. John says, “What our stores did was not only create a separate revenue stream for us, but they also boosted revenue in cities (where the stores were built) in the online space.”
The focus wasn’t so much to sell but to pre-condition consumers and educate them to buy online. “Additionally, allowing them to interact with the product adds significantly to the experience of the consumers as then they feel like they are being treated as equals,” he adds. Zivame is another example of an online retailer that has recently opened up a presence offline. However, there are no immediate plans to retail through the store, keeping it a purely experience driven zone. “We wanted to create a space for women where they can walk in and spend as much time in the store as they want, to discover products,” Richa Kar, founder and CEO of the lingerie brand notes. “It is important to have some sort of a human advisory service element. Most of the people that walk into our store end up purchasing online.” Most of the walk-ins reportedly spend at least 30 minutes in the store. The primary objective for Zivame is to leverage the store to build credibility for the brand.
Having a physical store raises the issue of warehousing capabilities as there’s always a limit to the amount of inventory that can be on display. To counter this, FirstCry.com provides a 32 inch touchscreen kiosk at its stores where parents can order any product which is not available in the store at that moment, but is available online. It also facilitates for coupons and loyalty points to be used and redeemed at both the touchpoints. YepMe.com has installed two touchscreens in both its stores to allow in-store ordering wherein a consumer at the purchase line will be shown suggestions for, say, accessories that you can place an order for online.
PwC’s Total Retail 2015: Retailers and the Age of Disruption, a global survey which conducted 19,068 online interviews in 19 territories in August/September 2014, states that 77% of respondents preferred checking a product out in a store before purchasing it online. Furthermore, 51% visited the store to seek advice from the store staff and 72% wanted to try out/experience the product before purchasing online. While these numbers look like they lag when compared to an 86% that eventually bought the goods online citing better deals, they however justify a retailer’s decision to have an offline store.
Offline stores or experience stores are being credited as being a force multiplier wherein a good experience in stores leads to increased traffic and translates to the retailer’s mobile apps seeing a considerably increased traction. Gaur states that the store’s two outlets managed to equal the online sales made over the four-day period that both the stores were launched in. Bansal adds, “In the last four years we have seen that our overall online traffic has significantly gone up. In fact, traffic is now growing beyond desktops and we’re
witnessing immense traction on our website and the mobile app. In the recent past, our app downloads have also grown exponentially.”