Offline vs Marketplaces: brands choose sides in retail war

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Brand Offline vs Online

India’s $500 billion retail sector seems to be in cold sweat due to a much smaller section of online retail.  Despite accounting for less than 1% of the Indian retail market, eCommerce remains by far the fastest growing channel. “Showrooming” – a concept where buyers examine a product offline and ultimately buy online is becoming increasingly popular in the Indian context due to heavy discounts and attractive offers. Moreover, electronics unlike apparel can be bought without touching and feeling as quality is assured by the brand you are buying. Hence, this heavy weight segment has seen a 60% annual online growth in India, a lot of which can be credited to heavy discounts and slashed prices offered by online retailers. However, these are starting to hurt the lifeline of manufacturers – offline retailers.

With VC backed eCommerce giants such as Flipkart and Snapdeal using predatory pricing to attract customers, brands seemed to have taken a stance. According to the recent trends, technology biggies such as Sony, Samsung and Canon have banned their brick and mortar stores from selling their products online. This step is taken to put a stop to unhealthy market practices by online retailers. Online Market places often have huge Venture capitalist investments backing them, hence, giving them luxury to sell products below the market price. This creates an unbalance in pricing between physical and online retailers. This pricing war- offline vs marketplaces-  beneficial in the long run of practices. ECommerce sites are taking away a serious chunk of business from physical retailers and wholesale retailers, who in turn, are putting pressure on the manufacturers. Offline sales are crucial for the survival of technology companies, and hence cannot be left to suffer.

This has lead firms such as Sony and Samsung to have “unwritten” agreements with online stores, forbidding them to sell electronics at lower than a manufacturer recommended price. Lenovo and HP have locked horns with online giants by warning customers to be wary of buying products from unauthorised online sites. Even in the apparel industry, firms are trying to reduce the amount of coupon discounts on their brands, according to the COO of Myntra.

This step to even out the play- ground for offline and online retailers further establishes eCommerce as main stream channel of retail now. With Flipkart’s $1 billion funding and Amazon’s $2 Billion investment in Indian eCommerce, it is safe to say that online retail is not going away anytime soon.

Hence the only way to go ahead is for brands to embrace Omni- channel retailing to provide the same customer experience across all retail channels. Varying prices across different channels can hurt the brand image and reputation of a brand. A constant brand experience increases reliability and confidence on the brand in the minds of consumers. Being constantly present throughout the consumer life cycle is becoming increasingly important for brands.

MartJack’s Guide for Enterprise Retailers and Brands for choosing the right online channel helps you make the right decision between Marketplace vs own eCommerce store.