Big boys of retail want to move online
Brick-and-mortar retailers such as Future Groups’s Big Bazaar and Aditya Birla Retail are understood to be ramping up their back-end to gear up to the e-commerce revolution. The idea is to find additional revenues, reach out to Net-savvy consumers as well as mitigate costs related to real estate among others.
Players such as Tata-owned Croma, which has launched its online format, are already seeing the benefits. Ajit Joshi, CEO, Croma, said, “The online opportunity for Infiniti Retail has enormous potential. Consumers are increasingly researching their purchases online and our presence in the e-commerce environment brings with it credibility and superior service.”
Kishore Biyani’s Future Group is understood to be looking at launching the online version of Big Bazaar. The Group, which already has presence in the online vertical through futurebazaar.com, is keen to replicate the online experience with Big Bazaar.
According to industry insiders, the company is ramping up its back-end and last mile connectivity before taking a final plunge. Some e-commerce firms, which started out much later than Biyani, have already touched the Rs 100 crore-mark, they say.
Players such as Reliance Retail and Bharti are also keenly assessing business potential in the online space.
The Future Group has footfalls of over 22 crore a year. Its current total annual turnover from all retail formats, such as Big Bazaar, Pantaloons and eZone, is estimated at over Rs 10,000 crore.
“Even if the Future Group is able to notch up a turnover of Rs 100 crore from the e-commerce venture, it could give players like Flipkart a run for their money,” sources said.
But there are many challenges in the online retail space. Aditya Birla Retail, which had done a pilot with a virtual store called Moremegabuys.com last year, has scrapped its online venture.
The company has, however, introduced an online retail portfolio for its apparels under the Madura label, called trendin.com. R Sathyajit, COO, International Brands and New Businesses, Aditya Birla Retail, said, “We started observing that e-commerce (online retailing) as such started gaining traction from 2007-08.”
The company said by 2011-12, consumers had started experimenting with categories such as apparels and groceries. “
Adding that the online medium enables retailers to do a lot more than they traditionally could, be it building brands, experiment price points, explore new markets among others, Sathyajit admits that the medium is challenging.
“As the shipment needs to be delivered at the consumer’s doorsteps, we are limited by the reach of organised logistics players. Consumer engagement is real-time across time zones. We get 30 per cent of our orders between 10 p.m and 10 a,m. We can’t sleep at all!!” he said. Meanwhile, the company claimed www.trendin.com had shown good results as it was growing at 50 per cent month-on-month, in terms of traffic and orders.
However, analysts note that pricing is a huge game-changer.
Besides shopping in the convenience of home, consumers manage to get huge discounts online due to lower operational costs of ecommerce players.
Mohit Bahl, Head of Retail, KPMG said, “Brick-and-mortar retailers getting into online space is an excellent synergy. They already have an established vendor base. The only challenge will be to define the catchment’s area. It will be worth the while to make an investment in back-end infrastructure.”