3 Questions to define retailer’s e-tailing strategy

June 28, 2012

Dilip Modi, Executive Vice-Chairman, SpiceWe have seen the growth of e-tailing in India in past 2 years and we agree that it is here to stay and grow. Offline retailers have now started to evaluate e-tailing.

At Spice Hotspot, we are building a strategic view on e-tailing. Spice is a category leader in physical retail, hence, our strategy on e-tailing has to account for it. It is not a new sector that we are entering into, so any views that we form on e-tailing have to be in the context of our present retail business. We also need to realize that physical retail itself in India is a high growth market. Our objective is to maintain the leadership position in overall retail, not in e-tailing or physical retail alone.

As we start to develop perspective on e-tailing business, three key questions emerge:

  1. Does e-tailing enhance value for our retail business?
  2. If we aren't present in e-tailing, will our retail aspirations suffer?
  3. If we are present in e-tailing, will it adversely affect our retail business?

These questions need to be answered in conjunction and the answers will be different for each retailer based on their conviction, stage of business and product categories. Having said that, I expect a lot of action from physical retailers in e-tailing.

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Dilip Modi

Dilip Modi

Dilip Modi is the Executive Vice-Chairman, Spice. Spice Group is US $2 Billion conglomerate with diversified interests primarily in Mobile Devices, Mobile Retail, Mobile VAS. Spice also runs Spice Hotspot, the leader in mobile retail with more than 900 stores in India, and Saholic, an e-tailing company.

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  1. The 3rd question seems interesting as I never thought about it. I can see org structure as a key thing. Should e-tailing be under retail or should it be different? I think this question become very important when retail players decide to move into e-tailing also like Tata croma just did. 

  2. A salient point driven in the article is the distinction between e-tailing and retailing. While for a new start-up doing only e-tailing it does not matter, but for a leading retailer like Spice, the entry into e-tailing assumes significance. It throws questions of consistency of customer experience, product choice availability (and resultant margins), HR issues of  hiring and retaining people in the 2 formats.

    Improvements in customer UI, users' willingness to pay for a wider range of products (as opposed to just books early on), and increasing retail wallet share make it a compelling proposition to get into the segment but the aforesaid issues should be thought through and considered. 

  3. These questions are interesting because of the difference of the perspective of an e-tailer and a retailer. E-tailers (mostly are startups in last 2-3 years) have to build their systems around e-tailing only and they can take more risks- they are startups! However, retailers like Reliance or Spice have already made huge investments in retail and their decision to enter online can impact their organizations. Hence, they will be more careful while making these deicisions.
    One important thing that clearly comes out from the post is that as a retailer, Hotspot wants to increase retail revenue- it can come from anywhere- online or offline. So, there can be interesting models- like attract customers from offline and serve them online? one of the channels can be loss making but it might be great for the overall business. So, i guess there is an opportunity to innovate.

  4. Pankaj Yadav says:

    Spice and other retailers should think about e-tailing as must do otherwise their business can suffer.
    3 questions are good, however, Indian retailers are extremely lucky to learn from US retail market during last decade.  During this period, BestBuy to Wallmart and Staples to Autozone had to enter eCommerce, all due to Amazon.  
    Big bazaar in India is also present in ecommerce through futurebazaar. There are clear signs of such a trend in other countries as well.
    I can understand that there might be short term problems in internal organization, but it will have a long term impact! May  be, we need to learn what how US retailers are managing both now.  That would help understand how US retailer's manage to overcome internal challenges.  Some of those takeaways are likely relavent for Indian retailers as well

    1. brijesh says:

      I am not sure if you can directly apply what happened in US in Indian retail situation. In India, organized is still much smaller. 1 point that Dilip also mentioned in the post is that physical retail is also growing in India. So- may be retailers hsould focus without getting distrscted by ecommerce.
      Though, I would say categories are very important like electronics, books, CDs are sold online. Groceries- I am not sure. So, i believe that answer will be different for different retailers. You can see the signs as well- Croma entered ecommerce because they are in electornics. Spice hotspot has similar situation.

  5. e-tail and retail should be used to complement each other and enhance the user's experience. For instance, I could purchase stuff online and have an option to pick it up from the offline store which falls on my way rather than wait for 2-3 days for the product to arrive at my place. IMHO, retailers who are jumping onto the e-com wagon should conciously decide to enhance user exp and if they can't think of it wait before taking the plunge. It should not that since local Ramu, Shamu has an online presence I need to have one too..

  6. e-tailing does enhance the value for retail business. We can view e-tailing as an extension to the retail outlet. Benefits would be zero cost for physical infrastructure and substantially low cost for employees. The e-tail business can integrate with offline retail business and all orders from e-tail can be fulfilled by the existing infrastructure of retail outlets. Services like buy online and pick in store (it saves time as you do not have to stand in queues to get the billing done) are possible only if you have retail presence. I have seen some good food retail chains like   spar etc. but I hate going there because of the time it takes to get the billing done, I guess if they have a service like buy online and pick up from store, I would buy from spar more often. Also I guess it makes sense for a successful retail business to foray in e-tailing as a large part of complex logistics and inventory management (behind most of e-commerce businesses) would already be in place.