India's burgeoning ecommerce business, marking a sharp shift from their earlier stance of slamming etailers for following a policy of deep discount..
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 channels get ready
Future Group and Shoppers Stop have committed over Rs 200 crore in their omnichannel strategy while Aditya Group already has an online 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 Ankit 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.
Detailed reports on inventory management, customer feedback and account reconciliation help sellers improve their offerings and services, and win more customers, said George. The Indian unit of the American ecommerce company has tied up with retailers such as Croma, Reliance Digital, Vijay Sales, Godrej Nature's Basket and Big Bazaar.
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