Quite a few aspiring entrepreneurs think of getting into the retail business. And, for very good reason. India is a large market, and the opportunity in retailing is huge. Once you have decided what you are going to retail, the big question is whether you should take your business offline (brick and mortar / physical) or online (e-store / digital)?
Most people assume that the decision to go online or offline is largely dependent on whether you want to do a small, local retailing business offline or whether you want to build a scalable, large, multi-city enterprise.
However, the ‘scale up’ factor shouldn’t be really the basis of your decision on whether to go online or offline. Because, it is possible to scale both, offline and online, as the demand for your product grows (think of Café Coffee Day, Barista, Vijay Stores, Croma, etc.). You must first understand and explore the dynamics of both physical and e-stores, which considerably differ from each other. And, then decide which option works in the favour of your business.
Let’s take a look at the two options.
Offline
-Customers can walk-in to the store to experience the ‘look and feel’ of the product, hence may be more suited for products where the consumer decision is likely to be based on touch & feel (e.g. fashion, groceries, organic foods). However, many online ventures in the recent past have demonstrated that consumers are also willing to buy online products that were traditionally considered needing consumers to touch and feel the product before buying.
-There is a human touch - you can offer ‘face-to-face’, ‘feel good’ and ‘personalized’ customer service.
-The physical presence develops a sense of trust among the customers and goes a long way in building a loyal customer base. (E.g. may be relevant for categories like financial services & products).
-The cost of setting up a physical store is substantial - buying / renting the space, furniture and interiors, electricity and other overheads, staff salaries, etc. On the other hand, online stores do not involve the infrastructure building costs involved in physical stores.
Of course, there are a number of retail businesses that just cannot be done online. For example – a spa.
Online
-You can reach out to customers beyond your geographical boundaries.
-You can sell a wide range or a variety of products, 24/7 - you don’t need to shut down your store after business hours or on holidays.
-You can automate your business processes and focus more on product development or customer service.
-The cost of setting up a digital store is less expensive than a physical store.
-It’s challenging to drive customers to your digital store. Given the competition, it is getting harder for new online stores to get ‘discovered’ by the consumers. So, unless you have a way of reaching consumers and making them aware of your online presence, the cost of acquiring customers online is quite huge.
Both online and offline stores are equally viable, lucrative and challenging options. But as you can see from the above comparison, the dynamics of each model are different and you need to take a call on the basis of your own concept, circumstances, vision and aspirations. Of course, it is possible to have an offline store with an online presence too… but usually that is more as a support to the offline store.
So, let the nature of your product and type of customers you want to serve be the key determinants. At the end of the day, no two businesses are alike. You still need a USP to sell your product. You still need to make your customers happy. As long as you can offer an exclusive or a competitive product backed with an excellent customer service, there will be a business to be created… whether offline or online.