Omni Channel Retail – Click and Mortar

Published by MBA Skool Team, Published on February 05, 2016

Growing at a riotous pace, E-commerce industry has left many wondering about the future of retail industry in the world. With maximum shopping still happening offline, trendsetters are on their path to create another buzz named Omni-channel retail. The article would discuss about apprehensions in the consumers’ mind to shop online due to their touch and feel psychology for products, its effect in e-tailing and how the e-commerce companies are bridging the gap between online and offline mode of purchase through Omni- channel retail. Lastly, the article would focus on advantages of Omni-channel retailing in the Indian market and ways in which various Indian companies are addressing the customer needs.

What is the new buzz named Omni-Channel in E-Commerce industry?

Omni-channel retail empowers the consumer to interact with the company in multiple ways. Shopping can be through various channels like mobile phone, desktop and the physical ‘Brick and Mortar’ stores. New companies are constantly coming up with numerous ways to grab the market share in this golden period of E-commerce industry and provide a seamless buying experience to every customer.

Image: pixabay

Let's consider, for a moment, a teenager wants to buy a pair of jeans online to save time. So he solicits advice from his friends and checks out the reviews on the website and makes a buying decision but is skeptical about the quality of the product. This is where the Omni-channel retail concept creeps in and provides customer with a medium to feel the product at the touch points near his locality. Now the customer can visit the touch point, which is the brick and mortar store and feel the product before making the purchase decision. He may opt to collect the product from the touch point itself or get it delivered anywhere across the country. Thus, it provides the customer with the seamless shopping experience.

As per Statistics from worldometers, current world population is approximately 7.38 Billion out which 3.24 billion people have access to internet (worldometers). India ranks 3rd having 243 million internet users among the top 10 countries in the world. As per joint study of Assocham-Deloitte, e-commerce is the new sunrise industry, and is expected to cross $16 bn by the end of 2015 (assocham) and will probably reach $60-$70 bn by 2019 as indicated by BCG analysis on Indian e-commerce market (bcgindia).

Thus, with the current forecasts on e-commerce industry, there is a huge untapped market that will be targeted by Indian companies in the coming years and implementation of Omni-channel medium is indispensable. Many Indian companies are not far behind in implementing the Omni-channel route to take the first movers advantage. Snapdeal, an Indian ecommerce giant, launched its Omni-channel platform in Oct’15 by tying up with The Mobile Store and Shopper Stop. The customers get an option to order their favorite phone or apparel online and collect it from nearest retail store. This would allow customers to ‘Touch and Feel’ the product and provide all the benefits of a physical store near their home. (Ndtv)

Conversely, Adidas group, which owns Adidas and Reebok brands, launched its omni-channel operations in Jun ’15 starting with its Chandigarh outlet. Adidias plans to install tablets at more than 200 stores across the country under this strategy. These tablets will enable customers to browse, research and place order to any of its store in India and abroad. It will provide customers entire range of products and design available at all Adidas stores at their convenience (business-standard) . Croma, a Tata company, selling consumer durables and electronics, have come up with their online store providing offline pickup facility. More than 30% of its online sales now are through omni-channel medium wherein customer just walks into croma stores to collect the product, which they had ordered online.

According to the report released by KPMG the e-commerce sector in India is projected to cross $80 billion by 2020, and grow further to $300 billion by 2030 driven by the increasing Internet penetration in India (thehindu). But are brick and mortar stores a thing of the past? Can we really imagine a world where everything is available online and ONLY online? Probably not, studies have proven that touch and feel still remains an important criterion for customer to buy products on an extensive scale as people have apprehensions to shop online. According to an interview of Kunal Bahl, founder of Snapdeal, 99% of shopping still is offline (economictimes). Ecommerce industry is not expecting a significant change even in another ten years’ time. This is precisely why they are planning to roll out an Omni- channel business and helping small retailers go online.

According to the AT Kearney study, some of the biggest ecommerce companies are brick and mortar retailers which contribute to 95% of sales in US (livemint). All these indicate that the line between offline and online is increasingly blurring. The future of retail will be based on the adage “Convenience is King” providing the customer with the option to decide from where he shops, how he shops and when he shops.

From the accelerated growth of click and mortar facility, it is very distinctive that Omni-channel is an opportunity that cannot be ignored anymore. Customers can order and buy online but collect and exchange it offline at a place of their choice. This helps them to get an optimum mix of quality, speed and flexibility.

Omni-channel retail has many advantages that local stores cannot replicate. Omni-channel not only provides customer with the feel good factor but also engages customers by providing convenience and enriching their shopping experience. Better customer conversions, faster inventory turnover, improved resource utilization and efficient supply chain management are the major advantages which ecommerce industry banks upon.

There are many challenges posed to ecommerce industry. Cash on delivery that was very inefficient and expensive for ecommerce will shift to cash on delivery points. Logistics and distribution network has always been cumbersome due to creaking infrastructure and disorganized transport. Consumers are not sure about what they are buying is really, what they want to buy. Also the older generation is still untapped due to lack of knowledge on the upgrading technologies and their usage. Through Omni-channel retail all these challenges can be taken head-on.

Omni channel, though a challenging aspect, will in the long run bear the best fruit of success. Omni-channel provides customer with best of both the worlds through Touch-Feel-Try experience. Omni-channel works on the proposition that a customer may start shopping on one channel and move to another. Each piece of the consumer’s experience is consistent and complementary. Thus, in the decades to come, it won’t be an offline-online retail. Rather, the battle will be about who are the ultimate winners of the online-offline combo (thehindu).

This article has been authored by Aayush and Mehul from IIM Udaipur


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