Buyers do mix of online, offline shopping
Nadia Pimenta, 31, does not like to shop online, preferring the brick-and- mortar stores that allow her to physically check products before buying.
Kedar Satyanand, 17, is the opposite. He finds stepping into a store a waste of time and buys online as far as possible.
But consumers like Pimenta and Satyanand are increasingly the minority in India, where the lines between online and offline shopping are becoming increasingly blurred. Most consumers do a mix of both, say executives, analysts and surveys. Shopping habits and behaviour are changing rapidly as the still-nascent modern retail market, which includes both online and offline channels, jostles for a share of the consumer’s wallet in the world’s fastest growing economy.
“In our target audience, pretty much everyone is going online,” said Ritesh Ghosal, chief marketing officer, Infiniti Retail Ltd which runs Croma, the electronics and white goods chain from Tata Group.
“There are 10% consumers who don’t go online at all, they may go to 2-3 physical stores and make a choice. There will be an equivalent 10-15% who don’t step out of home and do all their research online and get everything delivered home.”
“The remaining 75-80% buy across mediums.”
Online shopping is still young in India, as is modern brick-and-mortar retail. But the rapid growth of online shopping in the last couple of years is changing the way consumers shop and approach different shopping channels.
In fact, consumer behaviour is changing so fast that what used to be the norm a couple of years ago no longer holds true.
“What we saw last year is very different from what we saw this year,” said Rahul Taneja, vice president–category management at online retailer Snapdeal. Until last year, said Taneja, a lot of consumers who were experiencing ecommerce for the first time, preferred to buy products in standardized categories like electronics goods and mobile phones online. This was because they were not entirely certain about the experience of online shopping and wanted to limit themselves to buying products they were sure of.
However, since Diwali last year this has changed. Now, consumers shopping online are buying products which do not necessarily have standard specifications, for instance clothes and homeware such as jeans, shirts, dresses or even home utility items like mops, dustbins and cleaning brushes.
“The upswing in fashion and home has made these categories bigger than electronics and mobile phones to recruit new shoppers online,” said Taneja adding that people who buy these categories are also those who are quick to purchase products across categories. By contrast, those who still restrict their purchases to electronics and mobiles take longer to experiment with new categories.
This year’s best sellers at India’s biggest online marketplace, Flipkart, have been lifestyle accessories, and women’s and men’s clothing—along with electronics goods and mobile phones. And shoes, saris and watches emerged as the most searched products on the platform after mobiles, according to the company’s FlipTrends 2015 survey which analysed the buying preferences of 50 million Indians between 1 January and 14 December.
The change follows the growing proliferation of new categories online. A year ago the variety of products available on Amazon, Flipkart and Snapdeal was very different from what is on offer today.
“Snapdeal has added 6-7 million new items in the last year alone, taking its inventory of products available on its platform to 20 million,” said Taneja who plans to keep adding items online as the collection still only reflects less than a fifth of what’s available in all retail stores.
Likewise, the fashion vertical on Amazon, which was launched in September 2013 with watches and jewellery, has since added several categories, including apparel for women, men and kids, both ethnic and western wear, shoes, sunglasses, and handbags and luggage.
“This relatively new category (fashion) is among the top three stores on Amazon.in, in value and volume both,” Vikas Purohit, head, Amazon Fashion, India said in an email interaction in September.
The increasing assortment of products, often offered with promotions and discounts, is luring more Indian shoppers online.
“About 2-3 years ago, half these categories like fashion, home and groceries were not available online,” said teenage consumer Satyanand explaining that the main factors that have converted him into an online shopper are variety and convenience.
The number of online buyers in India is set to jump more than six-fold from 35 million at the end of calendar year 2014 to 215 million by end of 2020, said analysts Sandeep Muthangi, Nandish Dalal and Kunal Rathod of India Infoline Group (IIFL) in a September report.
Another shift in consumer behaviour has been the shift towards shopping on the mobile. Over 65% of Internet traffic in India comes from mobile handsets, compared to more than 35% in China and over 30% in the US, said an August report by Credit Suisse. Etailers like Snapdeal, Flipkart and Amazon get over 70% of their traffic from the mobile device, it added.
The growing use of mobile phones for shopping increases the interaction between consumers and etailers as buyers are able to spend more time on shopping sites—including when they are on the move.
Meanwhile, big box retail which is only 8% of the overall retail market is feeling the impact of the rapid growth in etail which accounts for under 2% of the overall retail sector. Over the last two years, modern retail has been losing the market share to etail. In 2015, modern retail grew at a slower clip of 7% compared to the overall retail sector which grew at 11%. The online retail segment has been growing at a compounded annual growth rate of 63%, said Anurag Mathur, Leader Retail – PricewaterhouseCoopers (PwC) India.
Interestingly, traditional trade continues to grow in India.
“What we are sensing is that traditional trade has been very strong and ecommerce has had no impact there. It is impacting modern trade,” says Vivek Gambhir, managing director and chief executive officer, Godrej Consumer Products Ltd (GCPL).
“The retail industry is indeed becoming more complex and is changing at an ever-increasing speed,” said a PwC September report. It pointed to factors like shifting demographics, growing disposable income, increasing digital penetration and acceptance, and rising competitive intensity in the sector. Each of these is forcing the industry to adjust and modify existing models and look for new approaches and processes to satisfy the needs of consumers.
The fact that shopping is now happening across channels is only adding to the complexity of the business.
Consumers may research online and buy at stores or look at a product in a store and then buy online. An exit survey conducted in the Diwali week by Croma found that 50% of the electronics and consumer durables chains consumers had visited croma.com, 55% had visited other etail sites and 50% had visited other physical stores.
To keep pace with this shifting shopping behaviour, brick and mortar retailers are in the early stages of launching integrated online and offline strategies so that they can be available to consumers at all times and wherever they are.
Retailers are also trying to present a standardized offering across different channels of sales. This is a sharp departure from earlier strategies where promotions available online were different from those offered offline. This has also meant that discounts at brick-and-mortar retail stores have increased.
But with everyone offering discounts and conveniences like cash-on-delivery, it is no longer enough of a differentiator. Moreover, brick-and-mortar stores are offering discounts for longer periods and are running promotions on many more occasions and categories as they compete with etailers.
“The price difference between offline and online shopping is not much anymore,” said Vandana Bhatti, a filmmaker from Mumbai. While etailers have created a perception that buying online is cheaper with discounts available for everything, this is no longer true or applicable for all products sold online, she said.
Convenience, cheaper prices lead to adoption of online shopping
At 13, Kedar Satyanand was early to online shopping. Initially it was just to order his video games, books and music but soon—within two years—he had started looking across sections. Now 17, he buys everything, from toothpaste and cosmetics to shorts and T-shirts, online.
Satyanand, who studies at an International Baccalaureate school in Delhi, found etail attractive as it saved him the hassle of having to look for parking spaces in crowded malls or queue up at check-out counters at crowded department stores. Moreover, large discounts made everything cheaper online. Also, there is a greater variety off goods on offer online, he feels.
“Going shopping to stores is such a waste of precious time. It’s so unproductive,” says Satyanand, who began shopping online in the Class IX because he needed to spend time studying. Satyanand is now a regular on websites like Amazon, Flipkart and Myntra. The only time he visits brick-and-mortar stores is when he needs to buy formal wear like blazers, shirts and shoes.
Now Satyanand’s family has also started buying their groceries online. Satyanand prefers to shop online from his desktop and not on his mobile phone because the bigger screen helps him to look at 8-10 products simultaneously. Sure enough after going app-only, Myntra has once again started allowing users to browse online. Even parent Flipkart has delayed its transition to Web-only and has improved its mobile browsing experience with a Flipkart Lite site.
One bad experience breaks the faith
About six months ago, Nadia Pimenta, 31, bought a pair of shoes online for her husband and she got the wrong size. The process to return the shoes and get them replaced took “forever” as the couple had to wait for the portal to receive the shoes before they could place a replacement order for the right size. The experience left them swearing never to order online again.
Pimenta who stays in Goa with her husband and in-laws prefers the whole experience of going to stores and buying. “I prefer the touch and feel and experience of shopping in stores where you can see the entire range,” she says and this even though Goa only has one large shopping mall and relatively limited shopping options. For portals like Snapdeal, non-metros account for 60% of the overall revenues as consumers in tier II and tier III towns aspire for access to brands and products that are not easily available in these towns.
Pimenta, an architect by profession, and her husband travel every four-five months to nearby cities like Pune and Mumbai besides holidaying in Asian countries.
These trips are largely shopping expeditions, says Pimenta who is not tempted by the large discounts offered by online shopping portals to buy online.
One of the biggest factors keeping Pimenta from going online is time. “When I get back home, I just want to relax,” she says. According to various surveys, online shopping peaks between 11pm and 1am. A lot of online shoppers are known to browse shopping portals before they go to bed.
For the Pimentas, who own a Maruti Swift and an Activa, shopping usually is a planned excursion. “In Goa, everything is not on the same street and, depending on what you have to buy, the outing needs to be planned,” says Pimenta whose husband buys the groceries from the neighbourhood store and local market.