Retailers More at Home with Online Sellers Now
Most retailers reach
about top 50 markets with their physical stores, while network of online
marketplaces can cover more than 5,000 pincodes
Brick-and-mortar retailers are
increasingly signing partnership deals with online companies to take advantage
of India's burgeoning ecommerce business, marking a sharp shift from their
earlier stance of slamming etailers for following a policy of deep discounting.
In the past few weeks, over a dozen
retailers have inked such deals. Flipkart, India's largest online retailer, has
added Home Town of Future group, HomeStop of Shoppers Stop and @Home, a
furniture chain owned by Nilkamal, to its vendor list while Snapdeal has bagged
Shoppers Stop and Tata-owned Croma among its exclusive partners.
Most retailers reach about top 50
markets with their physical stores while the network of online marketplaces can
cover more than 5,000 pincodes with millions of consumers. “At the end of the
day, we are also product and brand companies even as retailers,“ said Future
Group's chief executive Kishore Biyani. It makes better business sense to do
tie-ups in areas where the partner made more investments, said Biyani, who had
earlier criticised Flipkart among other ecommerce retailers for selling
products below manufacturing cost, even questioning legality of such
promotional strategy.
“For us, it's another channel which
is substantially bigger in terms of reach and can provide us consumer
understanding,“ said Govind Shrikhande, managing director at Shoppers Stop,
which signed a deal last week to launch its own store on online marketplace
Snapdeal. While the deals are in line with the global trend, a top retailer,
who did not wish to be identified, said brick and-mortar retailers are going in
for the tie-ups only until their own online chan nels get ready. Future Group
and Shoppers Stop have committed over . `200 crore in their omnichannel
strategy while Aditya Group already has an on ine platform for its brands.
Harminder Sahni, promoter of Wazir Advisors, however, said that such deals
benefit both parties since the focus of Flipkart, for instance, is on
technology and delivery platforms. “In that sense they are really not a competitor
to offline retail. It makes sense for Future group to collaborate rather than
compete with them,“ he said.
Flipkart's chief business officer An
kit Nagori agreed. “Several offline retailers have seen a massive ramp up in
sales after tying up with online players. The kind of investments made by
Flipkart in supply chain and the consumer base that we offer are huge...It
would be impossible to tap that kind of consumer base in a physical store.
Offline retailers don't have to reinvent the wheel,“ he said. Besides, Flipkart
will also provide Future Group rich analytics on what consumers are buying and
discarding, said Nagori. For most retailers, online companies and marketplaces
are just another sales channel. “Like we have exclusive outlets, we have a dedicated
online portal. Similarly, partnering online companies is akin to us having
presence in department store chain,“ said J Suresh, managing director of Arvind
Lifestyle Brands, which runs more than 800 stores in India across a portfolio
of 31 brands, including Gap, Calvin Klein, US Polo, Arrow and Tommy Hilfiger.
Peter George, director-channel sales
at AmazonIndia said ecommerce is still at a very nascent stage in India, with
significant potential for innovation and growth. “There is room for multiple
formats, players and, most importantly , innovation. However, what certainly
appears to be true is that brands are exploring omnichannel strategies and we,
as an ecommerce platform, will work with both sellers and brands to find a way
to deliver the best customer experience,“ he said.
Kala Vijayraghavan & Sagar
Malviya
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ET12AUG15
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