Why are customers shifting from brick and mortar to hybrid retail?
Major reasons for the shift from offline to online retail vary from technology solutions to several government initiatives
There has been a significant shift in India’s retail sector from traditional offline retail to hybrid/online retail in recent years. This shift can be attributed to the growing penetration of the internet, increased adoption of smartphones, and the convenience of online shopping. There has been an accelerated shift towards online retail in India in recent years, especially in the wake of the COVID-19 pandemic, which has accelerated the adoption of e-commerce by consumers.
The lockdowns and social distancing measures forced people to stay indoors and rely on e-commerce platforms to fulfill their shopping needs. The shift towards online retail has been accelerated with the rise of digital payments, e-wallets, and foremost with the increased use of UPI (United payment interface). This trend is likely to continue in the future.
The following are reasons in detail for the shift from offline to online retail.
E-commerce platforms: The emergence of e-commerce platforms such as Flipkart, Amazon, and Snapdeal has made it easier for brick-and-mortar retail businesses to sell their products online. These platforms provide an online marketplace where retailers can list their products, reach a wider audience, and manage their inventory and logistics.
Technology solutions: Several start-ups have developed technology solutions such as inventory management systems, payment gateways, and logistics solutions, which have made it easier for brick-and-mortar retail businesses to sell their products online. Zoho, Freshworks, Razorpay, Paytm, Mobikwik, Pay U and Porter are some examples. These solutions have enabled retailers to streamline their operations, provide additional flexibility and improve efficiency.
Digital marketing: Startups specializing in digital marketing have helped brick-and-mortar retail businesses to reach their target audience online. By using tools such as social media marketing, search engine optimization, and email marketing, these start-ups have helped retailers increase their online visibility and attract more customers. Common tools include Facebook, Instagram and Linkedin among other social networking platforms.
Funding and investment: The availability of funding and investment in the start-up ecosystem has enabled brick-and-mortar retail businesses to invest in technology and digital solutions to transition to the online mode. Startups such as Shopify have provided platforms for retailers to set up their online stores, and investors have been keen to invest in businesses that are embracing the online mode. Retailers like Ola, Nykaa, etc. have benefited from external funding.
Government initiatives: The Indian government has launched several initiatives such as the Digital India program and the BharatNet project, which aim to increase internet connectivity and digital infrastructure in India. These initiatives have made it easier for brick-and-mortar retail businesses to access the digital tools and infrastructure they need to transition to the online mode. The increased use of UPI (United Payments Interface) has also encouraged many small retailers to explore digital payments and also transition to online selling. The Open network for digital commerce (ONDC) has been piloted by the Government of India. This is a private non-profit Section 8 company established by the Department for Promotion of Industry and Internal Trade (DPIIT) to develop open and technology-agnostic e-commerce for all retail players in India regardless of size.
Who’s leading the charge?
There are many examples to illustrate the customer shift from offline to hybrid/online retail in India:
Reliance Retail: One of India’s largest retail chains, Reliance Retail, has been investing heavily in its online e-commerce platform, JioMart, which offers groceries, household essentials, and other products. JioMart has been gaining traction rapidly, and Reliance Retail has plans to expand it to more cities across India.
Flipkart and Amazon: These two online marketplaces are the dominant players in the Indian e-commerce market. They offer a wide range of products, from electronics and fashion to groceries and household items. Both companies have invested heavily in logistics and fulfillment infrastructure to ensure timely deliveries to customers. They have reported record sales during the pandemic and beyond as more and more people have jumped onto the online bandwagon. Amazon and Flipkart have been growing rapidly in recent years, with a focus on expanding their product selection and improving their delivery network.
Zomato and Swiggy: These are online food delivery platforms that allow customers to order food from nearby restaurants. These platforms have transformed the food delivery in India. They offer a wide range of cuisines from various restaurants and deliver them to customers’ doorsteps, making it more convenient for people to order food from home. They have been able to capitalize on the growing demand for online food ordering and delivery in India, with many consumers opting for the convenience of having food delivered directly to their doorstep. People have reduced their outside eating and dining experience. We have seen a shift from restaurant dining to in-house dining.
Urban Ladder: Urban Ladder is an online furniture store that offers a range of furniture products, including sofas, beds, chairs, and more. It was founded in 2012 and has grown rapidly, with a presence in over 19 cities across India. People have shifted from getting the furniture made in their houses to getting readymade furniture and wanting convenience.
Blinkit, and Bigbasket: These are online grocery delivery platforms that have witnessed a significant increase in demand during the pandemic. They offer doorstep delivery of fresh fruits, vegetables, and other household essentials, making it easier for people to avoid the crowded market. They also deliver fast within 10-25 mins. respectively.
PharmEasy, 1 MG, Netmeds: These are online pharmacy platforms that have seen a surge in demand during the pandemic, with people ordering medicines and healthcare products online rather than visiting a physical store. The trends of ordering online seem to have sustained even post-pandemic as these platforms have increased their assortments beyond medicines to lab tests, healthcare products, prescriptions, and surgery (2n.d opinion from doctors).
Lenskart: This is an online eyewear retailer that has disrupted the traditional eyewear market in India. It offers a wide range of eyewear products at affordable prices, making it a popular choice among Indian consumers.
The shift has been across all possible spectrums and formats. This also reflects the increasing comfort of people in online shopping. This trend has been driven by many factors, including the convenience of online shopping, the availability of a wider range of products, saving time and cost, and the ease of comparing prices across different retailers. This trend is likely to continue as more consumers become comfortable with online shopping and as e-commerce companies invest in logistics and fulfillment infrastructure to provide a better customer experience.