Online players seek offline presence to expand business

Over a dozen brands that started off as pure-play e-commerce businesses have an offline presence now, opening brick-and-mortar outlets in a bid to chase profitability and build trust among consumers.

Online players such as Clovia, Craftsvilla, PrettySecrets, Zivame, UrbanLadder, Nykaa, Myntra, Caratlane, Lenskart, Pepperfry, Creyate and Teabox have chalked out a strategy to focus on the offline channel by opening standalone stores or shop-in-shops (small touch-points at multi-brand retail shops). The strategy, the players feel, is paying off as the sales have improved significantly in the physical stores vis-a-vis online e-commerce websites.

Clovia, a lingerie brand that started off as an online player six years ago, started focussing on the offline mode last year after realising that only 5 per cent of customers bought lingerie products online; the rest wanted to feel and try the product before buying. Besides, offline has helped pump up sales for Clovia by more than 15 per cent in the last one year. The company is also close to break-even, said Neha Kant, who founded Clovia along with Pankaj Vermani.

“We opened our first store in August last year and in the third month, we had recovered all our costs, including rent. This gave us a lot of confidence to open more stores. Offline is still a very large market and can’t be ignored,” Kant said, adding that while online has helped create the brand, offline will help it grow.

More outlets coming

The company, which sells 5,00,000 units of lingerie a month, already has presence in 100 shop-in-shops and 25 standalone stores and each of these stores are profitable, Kant said. Clovia plans to be present in 150 more touch-points by end FY19 and open 15 more exclusive stores. The company is also looking at international markets having similarities with the Indian market. It has launched in Nepal and is planning to in Indonesia and Malaysia soon.

Similarly, Craftsvilla, which started as an online ethnic-wear marketplace, has also figured out that offline is an effective channel to grow the bottomline as it helps cut drastically two major costs — marketing and logistics . Craftsvilla, which also pivoted from a marketplace to a vertical player with focus on private labels recently, opened its first store in November last year.

“From a break-even perspective, while it takes online companies forever to turn profitable, physical stores take 6-12 months to turn EBIDTA positive at the store level. Besides, compared to online, offline doesn’t have to burn cash to acquire every incremental customer,” said Manoj Gupta, founder of Craftsvila.

The offline strategy coupled with the high gross margins of over 50 per cent from private labels will help the company turn profitable next year, Gupta added. The company has 15 shop-in-shops, besides five company-owned stores which it plans to scale up to 25 in cities like Mumbai, Pune, Nagpur, Hyderabad by next year.

Another important aspect of offline is a deep customer connect, Gupta said, adding that while online is highly scalable, customers will shift their loyalty towards portals that give better discounts, which is not the case with offline.

Flipkart’s fashion portal Myntra has also opened its physical stores for its private label Roadster besides planning to open stores for two of its other private labels — All About You and HRX — over the next year or two.

Myntra tried virtual reality to give its users the experience of touch and feel but that did not take off well. Experts feel that 90 per cent of the consumers shopping for apparels, accessories, shoes or furniture still prefer to buy after trying the products and hence the conversion is 50 per cent higher in offline vis-a-vis online.