Offline Retailers Open an Online Front
Cos slash prices, launch exchange offers to offset loss of business to the likes of Flipkart, Snapdeal
Top mobile phone and electronics retailers such as The Mobile Store, Future Group and UniverCell Retail are boosting their online presence with aggressive deals to counter e-commerce portals that have hurt their brick-and-mortar business with discount offers.These firms have slashed prices, launched exchange offers on old models and even offer faster delivery options for online purchases in a bid to curb losing business to the likes of Flipkart and Snapdeal. “It’s better to lose sales to one’s own e-commerce platform than to competition,” D Sathish Babu, CEO at cellphone retail chain UniverCell Retail, said.
UniverCell is offering maximum possible discount for online sales and has started a one-hour delivery option in some southern cities, Mumbai and Pune, utilising its back-end infrastructure of 460-odd stores.
The Mobile Store, too, has started exchange offers and discounted prices for online sales, while Videocon-owned PlanetM Retail said its e-commerce portal will benchmark prices with popular shopping sites. Future Group’s ezoneonline has started selling products at a lower price than what’s available in the firm’s physical stores, while a senior official at Reliance Retail said the company wants reexamine its online sales strategy. For more than a year these retailers, along with distributors, have been lobbying with manufacturers to stop indiscriminate discounting by Flipkart, Snapdeal and Amazon, which impacted their business.
While some manufacturers such as Lenovo, Toshiba and Nikon have warned consumers against purchasing from online sites without checking warranty status, most manufacturers have not been able to plug the discounts. Canon reportedly plans to offer longer warranty on products bought offline to negate online discounts. E-commerce accounts for less than 1% of total retail sales in India, but it is the fastest growing retail channel. According to Assocham, India's e-commerce market grew 88% in 2013 to $16 billion, or about . 97,555 crore.
In most global markets, online prices across products are lower than offline prices and online retailers such as Amazon are growing at a much faster clip than offline retailers such as Walmart. Now retailers, in India and elsewhere, look to make some headway in the online space. Rajan Malhotra, Future Group president and eZone CEO, said ezoneonline has to follow the rules of the online industry to survive. “Online is a new market in India and while we may have to play the pricing game now, but long-term plans are different and we want to eventually merge it with our brickand-mortar stores so that we can sell and distribute a product anywhere,” he said. Ezoneonline targets to close this fiscal with . 60-crore sales and raise it to . 150-200 crore next fiscal.
Essar Group-owned The Mobile Store offers up to 5% discount in online sales and has tied up with certain banks for additional discounts on purchases through credit and debit cards, bringing its online prices almost at par with Flipkart and Snapdeal. The company has also rolled out an exchange scheme for online purchase in Mumbai and plans to expand it into New Delhi, Kolkata, Pune, Hyderabad and Chennai next month.
Himanshu Chakrawarti, CEO at The Mobile Store, said, “While the e-commerce price war is certainly not healthy since it cuts into the operating margins, we can’t be too far away with prices.” So, while Samsung Galaxy Core cellphone is selling at around . 13,299 in physical stores, it is selling at around . 12,729 in the online store of The Mobile Store and . 12,299 at Flipkart. The Apple iPhone5s (16GB) is selling at . 48,150 by UniverCell on Amazon.in and at . 53,500 offline. Even regional chains like Great Eastern and Vijay Sales are foraying into e-commerce either directly or through online platforms such as Flipkart and Snapdeal. Nilesh Gupta, MD at Vijay Sales, said the retailer expects around 10% of its sales to come from online in 2-3 years. Gupta, however, said his firm sells at the same price online as in the stores — a policy that Tataowned Croma too follows. Ajit Joshi, MD & CEO at Infiniti Retail that owns Croma, said, “We have also partnered with marketplaces like Amazon, eBay and Groupon.”
An Article By ET
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