Thursday, October 9, 2014

Will Online Retail Become Bigger than Modern Trade


After seeing the aftermath of the "The Big Billion Day" Sale an interesting thought is coming to my mind, will online retail overtake Modern Trade or Organized Retail in India? One of the reasons this question came to my mind looking at the reactions which came from the members of organized retail. They have all queued-up to complain against the 6the Oct sale and the fight in Mobile retail and online has been on for quite some time. Without getting into the rights and wrongs of the issue, I will move on to the moot question.. 

I will briefly summarize some of the key challenges which organized retail faces , prohibitively expensive real estate for setting-up retail stores. Internationally large format retailers would locate themselves outside the city where real estate is not that expensive and people would drive to buy from them. India we have challenges of people willing to travel long distance for shopping: one is the challenge of travelling along with the widespread smaller kirana trader…

Added to that the fact that no one has cracked the format which would suit India, so we still do not know which format will work. Lack of clarity on regulations, especially on the entry of multinational players. and most of the retailers are bleeding....

On the online front, there are challenges too, but somehow I have feeling they have the potential to challenge the Big Bazaars and Reliance Retail's. And perhaps the low priced "android one" phones might be the bridge that ecom players are looking for. And add to that the regulations are not very clear for ecom, though the government is making the wrong noises...

Though organized retail has been around for quite some time it not managed to breach the double figure mark in market share. Internationally the online players have become an additional channel, and co-exist with the large format retailers, but in India because both of them are emerging simultaneously the scene might turn out to very different in the next five years. 

I am confessing that I am going with the hype, the bubble….. but then that is the fun in being part of the hype and sticking your neck-out…


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