Online-to-Offline (O2O), a step toward Omni-channel

Many Indian eCommerce companies are building their presence outside of pure play online retail and franchising through a variety of models, to build retail shops, increase brand awareness and acquire more customers.
Online-to-Offline (O2O), a step toward Omni-channel

Many Indian eCommerce companies are building their presence outside of pure play online retail and franchising through a variety of models, to build retail shops, increase brand awareness and acquire more customers. 

The retail industry has reached a full circle. In the past couple of years, pure online retailers and eCommerce shops have forayed into physical retail space and brick-and-mortar retailers are expanding their presence online to gauge the market. DLF Brands Ltd. – that manages Mango and Forever21 in India – and Arvind – the brand behind US Polo, Calvin Klein, Arrow and Gap – have announced plans to launch their online marketplaces, while to reinforce the online brand eCommerce companies like Lenskart, FirstCry, MakeMyTrip, Healthkart, Pepperfry etc are expanding into physical retail points to increase their presence and acquire more customers. The development will be prominent in the future, experts suggest.

Online-to-Offline (O2O) Model Gaining Traction

While FirstCry is all set to take the tally of its 100 stores to 400 by 2017, Lenskart bets big on its strategy to have about 2,000 stores by adding 2-3 stores per week. Says Supam Maheshwari, CEO and Founder, FirstCry.com – a firm that works on a hybrid model and is present on web, mobile and offline stores, “With the Omni-channel strategy in full swing, we believe in creating a seamless experience, offering purchasing flexibility for parents through the mobile, web and offline store formats. By March 2016, we plan to open 100 new stores taking the total to 200 stores and we plan to cross the count of 400 stores in India by 2017 and make shopping for kids an easy experience across all tiers.”

In order to reach masses and as part of their O2O strategy, the firm also runs a programme where the brand reaches over 70,000 selective parents every month and gives them a FirstCry Box. Under this programme, free gift boxes are given to each new parent across 6,000 (plus) hospitals in India to congratulate them on the birth of their child.

“We have an Omni-channel presence to increase our touch points. These physical stores offer our customers an exclusive opportunity to ‘touch and feel’ before making a purchase. Lenskart currently has over 100 stores spread across more than 66 Indian cities including Tier II and Tier III cities,” said Peyush Bansal, Founder and CEO at Lenskart.

“Our plan is to have around 2,000 stores in the near future and we are adding approx. 2-3 stores per week to get to that number,” added Bansal.

Mode of Franchising

FirstCry currently has unit franchising model and the firm strongly believes in that. “With unit franchising, a franchisee brings with him a great deal of local knowledge that is the key to retail. Also, dedication and commitment towards the franchisee is another factor which comes along with unit franchising,” pointed out Maheshwari. “To grow the business, high involvement is required, thus an individual franchisee will be able to do greater justice,” he maintained. Having a unit franchisee model also helps the company to treat all its franchisees as different profit centres.

At Lenskart, the company has a mix of unit and master franchising with a skew towards unit franchising. Bansal opined, “This is essentially because eyewear as a category requires personal involvement of franchisees to be able to build customer trust, which is done most effectively through the individual business partners managing stores.” The hybrid, assisted eCommerce model works very well for a complex category like eyewear.

O2O for Customer Acquisition and Brand Awareness

What started as a channel to kill the retail stores is seen heading to brick-and-mortar stores for categories such as furniture, eyewear, baby wear, health and wellness, jewellery, apparel and travel. Although majority of players claim to connect with the no-Internet generation through this move, reasons could relay across other levels such as shopping cart abandonment, customer dissatisfaction, rise in the number of returns, firms wanting to put a face to the name, and some others such as strengthening their positioning, moving away from the online clutter and giving the customer a chance to ‘look and feel’ the products.

While FirstCry, Lenskart and MakeMyTrip already have spaced in on multiple cities, the furniture and home product marketplace Pepperfry announced launch of 20 stores by year-end. MakeMyTrip has over 10 stores, and physical expansion is the main agenda on Healthkart’s future plan as well, according to an industry source.

So much so, the start-ups who have recently ventured into online retailing have put go-physical plans in place. Biting into the physical space would not only ensure customer acquisition, but create more brand awareness. “There are still lots of regions where people prefer to shop in their local market or the omniscient Indian mentality ‘to see is to believe’ exists. We are cashing in on that. We will be physically present in over five states by the end of 2015,” said Ritvij Pathak, Managing Director, thepoojashop.in, a product-as-a-service based start-up, offering pandit booking, epooja and manufacturers and dealers in brass/crystal/aluminium artifacts.

Conclusion

So, while having a brick-and-mortar presence will differentiate the eCommerce players from the pure play online retailers, and the ‘hybrid’ model will help the early adopters in customer acquisition and more brand awareness, online retail will continue to live and rise. The industry is skewing toward Omni-channel adoption, for sure, and new stores are mushrooming all over.

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