The Need for a Hybrid Retail Model in India

An online retailer raising the hackles of the traditional brick and mortar retailers; and few traditional retailers planning online forays is old hat.

Ultimately, what matters equally to customers is ease of shopping besides getting the right product at the right prices. And that would prompt the dual existence of the traditional bricks and mortars retail outlets as well as the rapidly mushrooming online retailers across India.

We need not go into the various pros and cons of both modes of doing retail business: much has been written about it already. What is interesting is the emergence of an unexpected, relatively new trend – That of online stores going brick & mortar.

Many once online-only retailers are now rushing to open physical stores in an effort to tap into the customer who still doesn’t own an internet connection.

There are encouraging reasons behind this – even five years from now, roughly over 80% of the Indian market would still be offline. Adding to this is the Indian consumer psychology to feel fully satisfied only with the ‘touch & feel’ of the item being bought. For a few e-tailers it’s even a drive to build up their brand.

All these factors are giving rise to a ‘hybrid model’ of retail in India, wherein both the brick & mortar and the online retailing platforms can compliment each other handsomely. Such a model would improve the RoI of both the physical store as well as the online shopping portal of the retailer. This becomes possible by doing away the need to open up huge physical stores as for the customer visiting the store a whole new vista of shopping opens up with a much wider range of products of the same retailer online. This would suffice to have comparatively smaller physical stores, spread out strategically – reducing both the rental costs as well as optimizing the supply and delivery costs of the retailer.

Further, the retailer need not stock up too much of any item, leveraging his e-commerce platform by making the physical stores hubs for local pickups of delivery. Using such physical stores for fulfilling order delivery via the online portal would be better than the usual mechanism of doing so from company warehouses, which mostly have to be located at the outskirts of the cities simply because of extremely high real estate costs within the cities. Compounding the problem is the fact that many Indian cities have commercial transport restrictions.

Such a hybrid retailing business model would save on costs and time, giving customers more options, and enhancing the overall shopping experience for him.

For all such reasons every online-only retailer in India should seriously give serious thought in either launching physical stores, or, look at some sort of partnerships with the traditional brick and mortars retailers who already have a strong foothold spread across several lucrative retail markets across India.

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