Coexistence, virtually!

The uniqueness of retail evolution in India need not baffle any researcher, as it is a no-brainer to say that every form of retailing existing from time immemorial in the country coexists even today. One may argue that the exchange of goods in the ancient barter system may have vanished but yet we see it back in its full form when exchange deals are announced! Exchange of goods and services or rather exchange of services for goods and goods for services online are seen and experienced widely nowadays. Such coexistence only shows that there is enough and more space for everyone in retailing in India. The burgeoning consumption in India is another growth story one cannot repudiate or deny. The attitudinal changes in the ever-growing youth population (or should I say, the growing population ever going down in its average age!) continue to facilitate promising trends of consumption. I remember I was stuck with the ‘hmt’ watch my dad bought for me when I passed my eighth standard examination (amidst all fury from my mother who opined that it was too early for me to sport a wrist watch!) for over a decade. I did not have the attitude to trash it after all, even after a ‘thin Titan’ adorned my wrist later! Now, when I see my kids I find them having a number of watches to go with every occasion or attire! Lightning is the speed at which many youth change their mobile handsets! Everything is in its promising trajectory of growth. Many high involvement purchases of those days where the whole family unit used to play different buying roles, have dwindled in mindsets to be categorized impulsive or casual, in the least!

A fortnight ago, as I was preparing to deliver the keynote at the conception of a Special Interest Group (SIG) in Retail under the Bangalore chapter of The Indus Entrepreneurs (TiE), many thoughts on successful strategies of retailing in modern times crossed my mind. In yesteryears we witnessed the fall of ecommerce and many websites established with expectations to make good business sense, failed. They stood by themselves as individual business entities and waged a lone battle. Separate entities were burdened with the management of a completely independent merchandise mix for each retail format. There was a need to hold high inventory levels. It also became an operational handicap for these organizations that finally faced business viability issues. These individually managed entities demanded exclusive warehouses and distribution systems. Separation between online and real retail operations also led to business practices and policies that failed to deliver unified product delivery and service image ultimately confusing customers. Adding to their woe, laptop penetration was low. We did not have those many gadgets like tablets and smart phones to use. Many customers were scared of using credit cards on the net. The business valuation game was played based on a ‘build-show-transfer’ model where entrepreneurs were motivated to build ecommerce sites with the sole objective of increasing valuation to palm them off at profits. During the days when the economy was growing at breakneck speed in the United States, new online businesses had great valuation-building opportunities. We experienced its rub-off in India too, but for a short while, luckily! Many hard format retailers too established separate ecommerce companies, which were closed later with the same speed at which they opened!

The online ‘game’ is on again now. Ecommerce is back in action. Many ecommerce sites have opened and are said to be doing good business. We see reports of huge funding deployed in many ecommerce organizations.  Ecommerce business models have changed. The opening of user-friendly websites to book railway and air-tickets gave rise to many first time users of ecommerce sites in India in a big way in the recent years. The use of technology/applications in computers, laptops, handheld tablets and mobile phones has changed the way people buy. Secure payment gateways have helped or rather customers now have the confidence to use credit cards on the net.

Successful ecommerce initiatives currently are the ones not hijacked by quick-buck-minded investors to drive the valuation game alone. They are the ones focused on having a good strategy. They are bottom-line driven to achieve sustainable scale. They cannot fall easily. Redbus.in first wrote the code for the software that would be required to run the operations of the bus operators and they still stay on ground anchored with the base of their operating alliances – a strategy to handhold and grow for a long time to come. Many brick and mortar retailers have forgotten standalone ecommerce now. They are now adopting a multichannel strategy to become successful. Cross-channel optimization is being done in multichannel retailing as a multichannel retailing organization has the opportunity to use each one efficiently to promote the other. With reference to developed economies, it is said that 65% to 75% of consumers have researched a product online and purchased that product offline. Of those people, a figure ranging from 50% to 60% are said to have cross-channel shopped in the past. That’s happening fast in India too. As online businesses take off, they only need a grounding strategy to integrate with other channels and alliances efficiently to reach customers.

All said, this nation of retailers would always see eras of coexistence!

Dr. Gibson G. Vedamani