Here's how brick and mortar stores are evolving to cater to a larger audience

The Indian e-commerce industry has seen growth, thanks to technological devices. Smartphones and tablets, with the availability of internet connectivity throughout India (including rural areas), have played a vital role in the growth of this sector.

The stage is now set for companies both Indian and foreign, large and small, to get a piece of the market. Companies are revamping their strategy by tailoring their business models to be more versatile and attract a larger portion of consumers.

Take a closer look at how brick-and-mortar shops such as Ethos and Chhabra555 have also become major players in e-commerce.

A diversification effort

The evolution of business has gone from brick-and-mortar to online retailing, and now to a mix of both.

While most retail stores are linking up with online retailers like Snapdeal and Flipkart, the retail store Ethos Watch Boutiques has set up its very own e-commerce platform to expand its reach. Even the 60-year-old saree brand, Chhabra 555, has reached out to a larger consumer base through Amazon and ebay, besides having brick-and-mortar outlets. They also have their own website that acts as a direct link to consumers.

In 2014, the luxury watch brand Ethos received a $1.6 million investment from Sixth Sense Ventures, India’s first consumer-centric venture fund. The luxury watch brand has surged to the top in its niche and has witnessed 37% CAGR over the past five years. The online platform has also converted over 20% of leads into sales.

New players & game changers

Online retailers are quickly realising that the multisensory experience and ability to have lasting relationships with customers offered by physical stores is unmatched.

Retailers that already have established physical outlets are also making their presence felt online to improve their customer base. The market is wide open and customers are up for grabs.

E-commerce companies like Amazon, Flipkart, and Snapdeal have expert domain knowledge, experience, and a large bank account to provide stiff competition. They have established themselves online and smaller companies might find it difficult to compete with these giants.

This is where vertical specific businesses, like Ethos, come into play. They offer product specialization and expertise that the larger companies can’t provide without the risk of losing part of their customer base.

Lessons from the past

E-commerce has become one of the fastest-growing sectors in the Indian market having grown at a CAGR of 56% between 2009 and 2014.
The industry has received billions in funding at all phases of development. The year 2014 saw over 20 private equity deals in the e-commerce sector. Flipkart raising over $1000 million from the likes of Morgan Stanley, GIC, Tiger Global, Accel India, Iconiq Capital, and DST Global and acquiring around 637 (million) USD from Temasek, PremjiInvest, and SoftBank Corp.

While some e-commerce companies raked in huge amounts of money, others struggled to stay afloat. Yebhi, an online fashion retail store, looked promising initially, but slowly faded after only receiving 240 crores since its inception in 2009.

Flipkart, Snapdeal, and Amazon have all managed to raise funds every year. The failure of Yebhi can be narrowed down to three main factors.

Lack of anticipation: Yebhi failed to take into account the arrival of Amazon and was unable to keep up with their offerings. They tried to change their business models, but weren’t being innovative enough.
Insufficient advertising: The company didn’t advertise as much as their rivals and have not had much of a presence in the public eye between 2013 and 2014.
Large debt burden: At Yebhi, the motto was to buy first and sell later. This resulted in a surplus of products that they couldn’t move, which led to debt.

In relation to innovation, if Yebhi had taken a different approach to selling, like setting up a physical store and providing fashion expertise, perhaps they could have fared well against the competition.

Retailers need to step up and give their customers both online and specialised in-store services. The retail industry has been witnessing a huge shift in consumers from brick-and-mortar stores to online businesses. But, companies like Ethos Watch Boutiques and Chhabra555 that have retail stores as well as an online platform are making businesses rethink their models in order to reach a broader audience.

(The article is authored by Utkarsh Sahu is digital strategist with over three years of writing experience for business magazines, such as Business Insider, Huffington Post, Tech Radar, etc. He admires technology with paradigm-shifting attributes, and digital marketing, social media and content are his current beat. An analytics enthusiast, he likes to break down key performance drivers of a robust digital marketing campaign. You may connect with him on LinkedIn and Twitter.)

(Cover Image: Thinkstock)
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