Since long, I have been advocating hybrid model for Indian e-commerce. By hybrid model, I mean, the store has to have an presence online as well as offline. And most of the transaction would involve the use of both mediums. This is most likely with a chain of stores who are already present.
A few pain points for both online and offline store:
1. Space is expensive: We all know that the real cost is increasing rapidly in India. This is adversely impacting the offline retail business.
2. Low range: Due to high cost of rent, the range of choices available in an offline store is quite less, and hence the choices available for customers are limited.
3. High Delivery Cost: The courier/ delivery cost are very high for online retail companies. This reduces the margin significantly, if not results in losses.
4. Returns: Online retail in experiencing a lot of returns. These returns again impacts the online retailers, as there is a cost associated with each return.
5. Customer Acquisition: Customer Acquisition is very expensive for online stores. The money spent today on customer acquisition, might be higher than the customer’s lifetime value.
There are many other pain points, but I believe these five are the major ones.
So a solution has to be sought which might address all these pain points and like I said earlier, it needs to be a hybrid structure, keeping Indian culture and people in view.
Some of the features would be as follows:
1. Offline stores: There would be a chain of offline stores, preferably spreading across the length and width of the country. This can be a franchisee model or a company owned one. Existing businesses would be able to take advantage of this better. However, the store need not be large. It can be a medium format stores, with a target to do business of large format stores.
2. Warehouse: A warehouse system has to be put in place. A central warehouse, with a few state/district based warehouse. The purpose of the warehouse would be to be able to send the products to the stores in the least time possible.
3. Selection: The selection range available in the stores would be limited. However, with the use of tablets, the stores would be able to give the users a wider and full selection range.
4. Orders: Customers who buy from the physical store ready made products would be paying a higher price, than the one who would buy online or using the tablet. This would encourage the customers to shift from physical to online purchase of the same store. The customers will need to pay while placing the order.
5. Delivery: All products can be test, inspected with trials at the physical store, free of cost. If the customer wants delivery at home, it will cost him extra. The customer can return the products, if he does not like the product at the store itself.
6. Savings: Customer who like to save, would be able to order online or using the tablet at the stores of other centers.
With this model, I believe a store of the medium format store of the size of Reliance Fresh or a Nilgiris would be able to sell or have a turnover similar to a large format store of the size of a Food Bazaar or Spar. This example is just for supermarkets. It can be used in any type of retail.
Do let me know your views.
