Physical retailers must accept the e-challenge

While e-commerce platforms like Flipkart, Snapdeal, Amazon and others are posing a big challenge for physical retailers/brands the latter too has many ways to keep its business intact. Studies point out that at Rs 18,000-20,000 crores, e-commerce in India, at the moment is just about 10 percent of the organised retail market, and is estimated to grow to over 15 percent in 5 years. Keeping the glory of the current online market in mind, big corporate house like Reliance Retail, Aditya Birla, Raymond, Arvind to American Swan, Nike, Puma, Raymond, Big Bazaar and Hidesign as well as foreign fashion labels are either jumping on the e-wagon or have already launched their websites or listed their products on third-party web-platforms. This shows offline retailers must accept the e-challenge and find ways to combat it and keep brand equity intact.

Maintaining brand identity

The first thing apparel brands selling their products online must follow is not to lose their identity. The identity of the brand must be retained while retailing on any e-platform. Companies must keep a check on unauthorized sale of their products online as well as pricing. While partnering e-commerce platforms, they must clarify the rules of pricing for online and offline retailing.

To avoid confusions, brands and e-commerce companies have started partnering to launch an exclusive brand shop online. For example, fashion portals like Myntra collaborates with brand owners to create replica of their brick-and-mortar stores online. It is similar to a shop-in-shop (SIS) format in a multi-brand store like in a Shoppers Stop or Westside. Leather goods manufacturer Hidesign, for instance has built such SIS formats across major shopping portals like Myntra, Jabong, Amazon and Flipkart and also provides them strict selling guidelines.

In recent months most shopping portals have added shop-in-shops to their platforms. While Myntra and Jabong have 50 and 30 SIS formats respectively, Amazon has over 15.

Define online discount strategy

After the recent ‘Big Billion Day’ mega-sale event on Flipkart, which was criticized by several retail majors for offering steep discounts on their products, the importance of defining discount strategy with online platforms has come to the fore. Though a brand may have not done it while going online, it must now define the e-commerce strategy. Also a brand cannot treat online platforms as a means to get rid of their old inventories at lower prices. Such a move may make an adverse impact on the brand’s positioning.

Puma, for example, has a global team responsible for designing its content and brand imagery for online portals. Its product strategy is aligned with the distribution strategy, which means different products are pushed through different channels. To put together its online marketplace calendar, Puma's marketing team conducts meetings with e-tailers six months in advance.

When a brand sells a product with deep discount online and the same product at full price offline, consumers feel cheated. So brands must keep the negative impact such strategies can make. As Arvind Singhal, Chairman and Managing Director of Technopak says, “With all the challenges for the brick and mortar retailers, and in the backdrop of the fundamental changes in Indian consumer behaviour, ‘e’ is likely to emerge as the most attractive retail channel for a large segment of the urban Indian consumer and offer the maximum competition to corporatised physical-format retailers, especially those in high streets and shopping malls.”

By 2023, estimates suggest that e-commerce will be the dominant ‘organised’ retail channel in top 75 Indian cities (cities with population of one million or more). It will account for as much as 30 to 35 percent of total merchandise sale by value in these cities and about 20 percent of total merchandise sales in the rest of urban India.