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Brick and Mortar Stores and online Stores - Can They Co-Exist?

Autor:   •  January 14, 2018  •  9,285 Words (38 Pages)  •  239 Views

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Ecommerce Timeline in India

Online Travel

This was the first sector to be influenced by the ecommerce fad. The e-commercialization started with the Indian railways and went on to revolutionize air travel, bus travel and in the recent years, taxi and bike hiring.

2002-IRCTC

The advent of ecommerce in India came in 2002 when Indian railways introduced IRCTC for online booking of railway tickets. The government experimented with this strategy to make booking of railway tickets a convenient process for the users so that they could make the bookings anywhere and anytime. The website was a huge hit, and soon reached unpredicted traffic numbers.

2003- Flight bookings

Airlines followed suit of IRCTC to start online bookings of flights in 2003. This was led by airlines like AirDeccan, SpiceJet etc.

Retail

The early 2000s: Mushrooming of online retail sites

Online retail shopping had been present in small forms since 2000 like Rediff shopping, Indiatimes Shopping, Sify and Home18 Shopping etc but these companies lost out in the race to giants that emerged later like Flipkart and Snapdeal because they were positioned more as content providers or digital advertisers and never marketed themselves as true sellers. Also their product range was limited since they did not collaborate with various producers and brands, along with giving the consumers a limited number of payment options.

2007: Rise of Flipkart, Snapdeal and other giants

The online retail market gained momentum after the launch of Flipkart, an ecommerce along the lines of Amazon, which completely revolutionized the retail e-commerce sector. With its deep discounts model and the option of cash on delivery payment, Flipkart soon gained a loyal market share in the online books and games and videos. Snapdeal, another ecommerce following the model of Groupon, emerged in 2010 and soon caught up with the online customers. By this time, the ecommerce business had become quite popular in India with a number of aspiring entrepreneurs launching their ecommerce websites, mostly specializing in certain segments like accessories, apparels, etc.

2013: Entry of Amazon and others

The entry of Amazon in the Indian ecommerce industry had a huge impact on the existing players. Entry of Amazon triggered a series of mergers and acquisitions of existing smaller companies by the bigger companies and an ecommerce war of bigger discounts and larger fund raisings. After Amazon, even Alibaba, of China, is planning to enter the Indian market.

India is one of the fastest growing markets for ecommerce in the world, especially in B2C ecommerce. Since 2009, the ecommerce sector has grown by a Compounded Annual Growth Rate of over 34% and is currently valued at around 20 billion USD. The eCommerce sector mainly comprises of eTravel (70% of total eCommerce revenues) and etailing comprises of online retail and online marketplaces (CAGR of around 50%).

Below is a graph depicting year on year growth of ecommerce and etailing sectors in India:

[pic 2]

Data Source: Crisil, IAMAI

The internet-users and mobile base of India is increasing rapidly, resulting in estimation of huge growth in the eCommerce sector in the coming years. ECommerce is now extending to new product categories like groceries (Bigbasket.com, localBaniya.com etc)

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Literature Review

- Report by A.T. Kearney on Omni-channel Shopping Preference study

In the recent research study conducted by A.T. Kearney on the evolution of omni-channel commerce i.e. the changing customer preferences for different mediums while they buy different products in various categories in recent times it is clearly established that for the U.S. customers shopping in the physical stores i.e. Brick and Mortar store is clearly the preference over other mediums.

It was found that most of the customers across various categories of products and age groups find physical stores more comfortable because these stores provide the customers with the touch and feel of the product and hence leading more customer satisfaction post the purchase of products.

Also customers who buy online through ecommerce websites first prefer to check out the product in the physical store as this hands on experience gives the customers greater confidence while buying the product. It is also established that in U.S the emotional value of stores or the shopping experience at stores is far greater as compared to other online channels, and this is particularly seen in categories of products which involve greater touch and feel while buying the product like apparels, clothing etc which further translates into greater customer satisfaction for the product that they buy. As customer satisfaction is at the middle of any business strategy in the retail industry therefore retailers would ensure that people have best shopping experience.

The report also lays emphasis on how innovation is the key to survive in both ecommerce and Brick and mortar retail and growing competition in this retail sector would ensure that both would remain relevant in the nearby future for this the report quotes data collected across various sectors. The report has segregated the overall buying experience across five parameters –Discovery, Trial, Purchase, Pickup and Return- and has analyzed it on these parameters .It shows that how different mediums offer different levels of satisfaction for these parameters. It also shows that the number of Brick and Mortar stores have increased in the U.S. as most of the investment being routed to this in the retail industry.

However this report does not provide any significant data or findings for customer preferences outside the U.S. which is a possible shortcoming. Also an in depth analysis of how sales in platform effects the other platform and both can play positive role towards each other so that one form of business complements other and help in the growth of the other.

Overall the report is good insight into the U.S. retail industry i.e. where customers prefer to buy and which platform excites him the most and the reasons

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