The future of retail is online.
At the start of the last decade, no one could have foreseen how physical and online retailers need not be at opposing ends of the spectrum - we have seen these worlds merge as we have scaled Magicpin to drive US$ 1 billion of business.
But that’s the past. Here’s how we think Indian retail is going to evolve in the next 10 years.
With the use of data and technology, online and offline experiences will continue to overlap in intelligent ways to create an omnichannel customer experience. The silos in which online and offline retail currently reside will break down. In a post-pandemic world, where we have come to rely heavily on online shopping, we’ll witness a happy marriage of the two: the convenience of shopping from a multitude of choices on your phone, with the reliability of a small local retailer.
What Role will Offline/ Local Retailers Play in this Transforming Omnichannel Landscape?
Even in an online-first world, several experiences will continue to remain offline. Eating out at your favorite restaurant, social get-togethers, birthdays, anniversaries or just having a day out will continue to be real experiences that cannot be simulated online. Fashion shopping is a touch-and-feel experience where you need to try on the clothes before making a purchase.
You can explore all your dream vacations online but you will need a real vacation to enjoy it. The fun of window shopping, when you visit a mall and walk down the aisle looking at the window displays, is another enriching experience. Physical stores will remain entertainment and experience centers.
Shopping for essentials, however, will have a significantly higher share online. Unplanned purchases like groceries, food, sweets, medicines, fresh fruits, vegetables, meat, and small eats will still be fulfilled by the trusted local retail - but with deliveries within the hour. The reason local retailers will have an edge against the verticalized e-commerce players is instant delivery.
Planned purchases would rely on the e-commerce channel where same-day delivery is not important. For example, Grofers or Amazon for groceries, NetMeds or Pharmeasy for medicines, etc. Planned purchases for long-tail items like sports goods, small items of furniture, and others will also be significantly online.
However, there will remain categories of big-ticket items like computers, phones, and white goods which will remain offline even if they are planned purchases since they involve the touch & feel experience. Online platforms will assist in the comparison of options and identifying the best deals, but more transactions will be closed offline.
Building Trust and Discovery for Offline Retail Through Content is the Big Opportunity as this Transformation Happens
The hyperlocal market will remain intensely fragmented across categories because of the extremely low operational cost of the local retailer. E-commerce will also increase in fragmentation due to the increasing presence of D2C brands.
Building discovery and trust will be key for retail to be online first. Platforms that help consumers discover the best-personalized options will win.
Content will be the key to building trust and discovery. Content starts from functional data of the retailer like location coordinates, phone number, address, pictures and builds towards ratings and reviews that help build social trust.
For home delivery, discovery will also need the content on products sold at the retailer - the catalog. We have already seen well-defined models in food delivery, established by Zomato and Swiggy that are doing a great job at discovery. Similar models need to be put together for other categories.
Technology to Build this Online to Offline World is Ready
Online local marketplaces (like Magicpin) will enable consumers to discover retailers and the products sold at their stores on one side while helping merchants grow their business on the other.
There are a lot of problems around making discovery and transaction flow seamlessly that have been solved and a number of teams in the technology ecosystem are collaborating towards improving and scaling these solutions.
We are going to witness the transformation of how we consume retail. There’s one thing we can guarantee - it will be an enjoyable experience for all consumers, retailers, and manufacturing brands in this ecosystem.