The everywhere retail

Spurred by the pandemic, the convergence between offline and online commerce could reach a tipping point in 2023

The pandemic fundamentally changed the way Indians shop. Digital shopping took off in a big way. But now, based on empirical evidence, shoppers are thronging back to the stores. As the dust starts to settle down, striking the balance between digital and in-store shopping will become critical. In China and the US, there is already talk of the emergence of a 50:50 world in the next few years, where, for instance, food and grocery shopping is split equally between digital and physical.
 

It is unclear whether India will follow the US or Chinese example anytime soon. But the pandemic has shown that the consumer is now ready to transact digitally, thanks to the ubiquity of the smartphone and payment systems — and gradually, efficient supply chain and logistics systems will ensure faster deliveries direct to homes across the country. Last week, Amazon introduced Amazon Air in India, the first e-commerce firm in the country to have its own air cargo fleet. As the third country after the US and Europe to get its own Amazon Air fleet, it is a signal that e-commerce has gained a level of maturity. Instead of the longer lead times involved in transporting goods in the belly of a commercial aircraft, an e-commerce marketplace like Amazon will now have greater flexibility to quicken the pace of delivery.
 

None of this suggests though that e-commerce will trump physical stores. On the contrary, both physical and e-commerce plays are likely to see expansion in new, innovative ways. Indian households are now willing to experiment with multiple channels, depending on the occasion or the convenience. In fact, this year could be an important tipping point for omnichannel retail.
 

Consider Reliance Retail. It continued to expand its physical stores during the pandemic, even as it ramped up its online presence through JioMart, its e-commerce marketplace. Last week, Reliance announced that it had seen 789 store openings —spread over 6 million sq ft — which drew in 201 million footfalls in the last quarter. And now Reliance is also starting to rev up buying on WhatsApp, through its partnership with Meta. That’s a critical signal because Indians are among the biggest users of WhatsApp in the world and look at it as a convenient way to not just message, but also to transact. Starting August this year, it enabled users, including first time online buyers, to browse the JioMart’s entire grocery catalogue, add items to cart, and seamlessly make the payment to complete the purchase.
 

Online grocery and food retailer BigBasket, now part of the Tata group, has marked its foray into the quick commerce opportunity with BB Now, promising delivery in under 30 minutes. Its goal is to deliver more than 80 per cent of the orders on BigBasket the same day.
 

Also, on the cards are three other plans: One, an expansion into 450 towns by March this year, signalling that the opportunity in tier II and III towns is now ripe for the taking. Two, it is testing out a large format offline neighbourhood store model that will sell fresh fruits and vegetables and FMCG products. Three, a 5,000 sq ft new tech-driven store in Hyderabad, which will only have self-checkout kiosks and no tellers.
 

Spurred by the pandemic, the growth in e-commerce, and the perceived success of omnichannel brands like Nykaa, Pepperfry, Lenskart, Myntra and Mamaearth, there are many direct-to-customer (D2C) brands across the country that hope to chart their own path across footwear, apparel, gourmet food, fitness products and many other categories. Yet unlike the pioneers like Nykaa, only a few will be in a position to develop their own omnichannel strategies. Scaling their customer base digitally is a challenging proposition. The costs of acquiring and retaining customers and also investing in brand-building can make it tough to make any money, and drive the shift to multiple channels.
 

Some of these stronger digital-first brands are likely to be acquired by aggregators like Mensa, GlobalBees, THG, GOAT Brand Labs, and Una Brand. Last week, Ashni Biyani, Future Group chairman Kishore Biyani’s elder daughter, joined the line-up with Think9 Consumer, a new multi-brand platform. She plans to co-create a portfolio of carefully handpicked digital-first brands that offer high gross margins, high average order value or profitability, across retail, fashion, FMCG, kids furniture, home decor, beauty and ayurveda. Think9, Mensa and others are modelled on the lines of US-based start-up Thrasio, which seeks to acquire successful third-party Amazon sellers by promising them an attractive exit and then completely remoulding the brand for scale with support from its in-house brand, supply chain and technology teams. The jury is still out on whether these aggregators in India will continue to stick to a digital-first strategy or depart from the Thrasio playbook and seek to move offline.

The writer is co-founder of Founding Fuel