Online Retailing vs Brick and Mortar Retailing – a Comparative Outlook

This is a guest post from Ashish Kumar Gupta

The Statement “E-Retail will out shine the Brick and mortar retail” may not ring the bell in your mind as you are already hooked to online retailing and going GAGA over the comfort and flexibility, it brings to the table. It sounds great for the online retailers and their valuations are going through the roof.

Flipkart – the biggest Indian online retailer is already mulling for 30 billion dollar valuation only after some months when it raised capital on 9 billion dollar valuation. Prospects are very bright for e-retailing and media is filled with all the statistics proving the point right. But what does this actually mean for Brick and mortar retailing; the topic requires a discussion from a fresh perspective.

Retail sales = online sales + off line Sales (Brick and mortar retail or instore sales)

Basically it looks like sum zero situation where sale made at one channel looks to be to be the loss of other. On line retail is growing at a scorching pace and certainly at the cost of instore retail sales which are almost stagnant (Forrester Research US). Next wave of growth is coming from online retail. The story looks to be simple.

But there is a cliché in this beautiful story that the growth is not coming from pure play online retailers but from the retailers who have presence on and off line both. (Source:A.T.Kearney Omnichannel Shopping Preferences Study 2014/US). The trust factor for the multi channel retailers were found to be on the higher side that certainly transpired in to sales.

Same theory is applied to apparel retailing.

India is going through the 1st phase of transition when the pure play online retailers are having a heyday owing to the deep penetration of the Smart phones with the seamless internet connectivity though at a lower bandwidth. With improved logistics and increased penetration to Tire 2 and 3 cities, anyone can buy a product of his choice from a wide assortment of products which was not possible before. 

In India Online retailing has opened a new frontier by channelizing the sales to the organized sector. Indian unorganized retail is taking a hit and will have a tough time in the coming days. Organized Indian retail is having a course correction by starting their online channel on stand alone or in collaboration with existing online retailers. Indian companies are following their counterpart in US and taking up new technological innovations in order to gain the lost ground.

Ashish Kumar Gupta is a Master of Fashion Technology from NIFT and he holds a Bachelors degree in Textile Technology. He was associated with Madura Exports as Assistant Quality Manager for two and half years. At present he is working with Lovely Professional University as an Assistant Professor.

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