Why India’s Online Startups Are Turning Offline
Online furniture market place Pepperfry decided to open its first offline ‘concept store’ in Hyderabad earlier this year in June, five years after it began selling online.
Today it has 10 such stores and hopes to double that number over the next six months. Its CEO and co-founder said, “Most of our customers spend close to Rs. 4 lakhs at a time, so the offline centres help them see the finish of the product, and for the trust issue I think it’s very helpful and important.”
And trust is not the only niggling problem. The Google-AT Kearney India Report, outlines challenges of selling online, including trust issues, lack of instant gratification and the dreaded long wait for delivery. Which explains why Pepperfry’s closest competitor Urban ladder which made a sharp pivot from being an e-commerce portal to a furniture brand, is also planning to set up offline stores.
This is not unique to India. The big daddy of e-commerce, Amazon, went the brick and mortar way with bookstores in the US in early 2015. Amazon’s billionaire CEO Jeff Bezos during the annual shareholder meeting held earlier this year, underscored the need for retail expansion to understand which sales tactics may work best in an offline environment. Speaking about Amazon’s future strategy he said, “We’re definitely going to open additional stores, how many we don’t know yet”. Amazon also has an offline presence in India. Another heavyweight, Jack Ma’s Alibaba also made its offline foray in north China early this year.
And the offline bug seems to have bitten other big Indian startups as well. Myntra, online fashion portal owned by e-commerce giant Flipkart, is all set to launch offline ‘experience stores’. Talking about the move, Myntra & Jabong CEO Ananth Narayanan said, “We’re launching offline stores by the end of this year, and they’re going to be completely tech enabled, high-tech stores, very interactive.”
E-commerce is booming and the recent Diwali sales offered plenty of proof. Business was up 40 per cent this festive season. But it is still a tiny slice of the pie. Online shopping accounts for only $38 billion of India’s total $600 billion retail market. With 900 million Indians still without access to internet, internet-based startups seem to be adopting the dual strategy of expanding both online and offline to reach out to every last customer wallet.