Offline Versus Online
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Remember your good old friendly neighbour shop where you went to buy everything you needed. parents guiding us to get those groceries from “Nandu ki shop” and getting clothes from “Jain Uncle ki Shop”, badminton racket from “Bansal Sports Shop”, 2 KM away from our residence. We went to buy our monthly grocery needs from a wholesale market about 10 KM away. We went to weekly vegetable markets and get loads of veggies for the week. It was a celebration, the whole family prepared for it and the whole family waited for it to join the buying celebrations. The excitement of getting new things for everybody in the family was just next to our birthday’s. The nostalgia is still in my senses.
However, it’s not the same now. The emergence of E-commerce/Online shopping has changed the feelings forever. The new shopping has its own charm but nothing like the earlier days. You now don’t use any other sensory organ other than your eyes. The oldies will remember putting all the sensory organs to use even when buying clothes, we even smelled cloths, we rubbed it between our fingers to feel the fabric. Now we see pictures, zoom the product to understand what it would be like and praise the photographer for pixels. We buy everything online now. This generation of new shoppers is now addicted to shopping on the go. With the ease of getting things delivered at home without sweating it out in the market, it saves time. Maybe they get dissatisfied once the product gets delivered or maybe they get some fake products many a time, but even then, the online business is growing. We now buy most of the things online, even diehard offline fans like me sometimes indulge in online shopping. However, what do you think what’s going to happen in long run? Let me decode it for you.
Have Things Really Changed
India will never go wrong with brick and mortar shops. Indians may have turned their heads slightly towards online shopping but online shopping is just 11 per cent of the worldwide retail market. Still, 89per cent people shop offline. People all over the world want deals and discounts on any item that they purchase. People looked at the opportunity to buy things at discount provided by the online markets. But companies engaged in E-Commerce business cannot dole out the discounts forever. They have to get profits to keep running their organization. That is why many E-Commerce companies got shut down. Brick and mortar retailers, however, give calculated discounts and they are able to run their organisations for long and they keep generating profits.
Future Group, which runs their Big Bazaar brand had an operating profit of INR 832 Crore for the year ending 2018. However, for the same period, Flipkart group loss was around INR 3200 crore. Snapdeal lost about INR 613 Crore, even though they cut losses from the previous year. Shopclues lost about INR 208 crore and so on. You will see every E-Commerce company making loss currently. To make profits they have to have a viable business model, which includes that the company do not sell products on deep discounts and charge the buyer courier fees for each item. They also have to tweak their product return policies.
As soon as they start doing the above three things, not offering discounts, not offering free courier and tighten the return policy, people will become cautious. They will stop buying products online. Then they will prefer known shops or at least neighbour shops. People want confidence in products and selleINR They do not want fake products. People want products first and then pay after they see and feel the products and see if they work or not. That is why Indians pay cash for more than 50per cent of ordeINR
The Real Business
Succeeding in E-Commerce in India is going to be very tough, if not impossible. Indians or other people all over the world want a discount. That is why the word “Sale” is loved all over the world. That is why Indians rush to Dubai for shopping. Indians all over the world are known as best negotiators after Chinese. This is so embedded in our values that we buy more if we get a good deal or discount, else we buy in limited quantity. Selling products on deep discounts are not helping E-Commerce companies and selling products for full price are again not working with our generation.
Maybe these companies will want to wait for 2 generations to change, till then we wish them luck with their money and efforts. They should cross their fingers that money to continue deep discounting last that long.