Are Shopping Malls dead in India, thanks to Mobile and Internet Technology?

Digital sales are slowly replacing physical salesMulti brand multinationals will not have it easy in India as this may be too late for these brick-and-mortar giants to enter the market.  Without an online strategy in place, their entry would not be very attractive for the youth who seem to be the regular shoppers now.  The internet shopping in India is here to stay and would only improve from here and if not the way to go, would be a strong alternative for the normal shopping in stores. 

   We already know that Metro has its limitation due to ‘political’ pressures in competing with the local small time shops.  IKEA is announcing its entry with some ‘forced’ restrictions and will not give the look and feel of IKEA elsewhere. .  Walmart has been waiting and waiting for a long time, initially by setting up an alliance with Bharti who already have the local Easyday shops.  Now with problems at the top with the CEO resigning and everything, something does not seem to be well at the top and hence with Wal-Mart itself in India. 

    Personally the frequency of visiting Metro has diminished to once or twice a year from once a month couple of years ago for me and my friends– the reasons being the distance travelled as they are situated in either North or South of our city, more instinctive buys that results in large bills, not much of variety in the store as they seem to carry only the hot moving items, not much price differences now between even an Easyday or a MK Retail and too much crowd. All these factors disappear when we buy online as we buy only what we want, gets delivered at home and price is better.

    The question now is: Is India having the Walmarts, the Ikeas and the Carrefours too late? Do these huge all-in-one brick-and-mortar retail megastores make sense in this day and age? Where do we have the real estate to establish these huge megastores in an area where people have easy access to? Is this going to be a dumping ground for cheap quality Chinese goods into our market? Most importantly, are they going be better in quality at the same time cheaper in price than what exists today?  This is key for them to flourish and maintain the same global standards that they are known for and they have to source locally as well.  They definitely would give a run for the money for stores like Big Bazaar, More Super stores, Star Bazaar and Reliance Mart which is definitely needed as what we get from these stores is not worth the time and money spent there and I sincerely hope we are in for better service which is totally not in the charter for our Indian counterparts.

    With the boom in internet shopping, is it really worth an investment for these stores and is it really worth our time as customers to venture into one of them, but for the fun and excitement of seeing a huge megastore where you get everything and get getting trapped in getting produces that we do not need just because it is cheaper than outside. With technology, should not the world become smaller as it always has been – remember when airlines were introduced, over time, global travel has shrunk in time.

    Our shopping brains are thinking different now and would evolve to getting the next hot fad, at the best price, delivered at our home after an in-house trail – why travel the distance in this maddening traffic and with escalating petrol prices?  

    There is a great way to get the right products and this would be through the VAS route if the phone operators can come up right applications based on context, location and social means.  The mobile ads are already catching up now in India and it is time to focus them to an actual sale.  Yes, depending on the place we are, through GPS, we can be attracted to the right place to get what we want, which is based on a match with a shopping list application that we have stored in our mobile and that informs us that the ‘time is now to buy it’.  This would be Nirvana.  This way we address only our NEEDs and not our WANTs.

M-commerce growth and trends in India (as opposed to how many have internet connections and total population):

  • Population of India in 2013:  1.239 Billion (Ref 1)
  • Mobile internet growth surpassed  more highly monetized desktop Internet usage in May 2012 (Ref 2)
  • There were 904 million subscribers in October 2012 according to TRAI out of which only 78.7 million were Mobile Internet users (accessed internet on mobile at least once a month) and projected to be 87 million by Dec 2012 and this is expected to double by March 2015 to 164 million. (Ref 3)
  • In India, e-tailing has the potential to grow more than hundred-fold in the next nine years to reach a value of $ 76 billion by 2021 from $0.6 billion in 2012. The growing broadband users along with mobile Internet users will drive this e-tailing story. (Ref 4)

   With the slashing of the 3G data prices by almost all leading service providers like Airtel, Idea and Tata Docomo, and the decrease in roaming charges suggested by TRAI,  this trend is very healthy and we hope to see lots more data flowing on the mobile internet.

   It is important for any E- shopping site to have the following – secure way to transact, trust of quick delivery and quality guarantee, ease of returns, and a good touch and feel.  The last of these, touch and feel factor, is the one that would attract anyone to a site and make them comfortable to shop inside due to that site being attractive, being relevant to what one needs, being easy to use, has a good graphical interface and has a ‘virtual trail room’.  The security part has to be enhanced and must be foolproof and every step must be taken by the e-tailer not to sell our information to anyone (in India especially this has to be implemented stringently – how else can you explain the umpteen garbage messages that flood your mobile with offers?). The quality must be equated to ‘what you see is what you get’ with no aberration whatsoever and no replacement without your knowledge, and also return policy has to be free, fair and easy. Every step must be made to return the stuff to the courier itself if this is not suitable after a quick home trail, and this means the delivery must be more specialized to include return delivery too.  Right now, most of us go for Cash on Delivery (CoD) and if the charges are extra for the CoD, more than half of the e-shoppers drop the idea of shopping.  E-tailer enjoys as they get the cash or credit before or as they sell the product, which is the best business model to be in, as this was what made Dell popular – they deliver the computer only after you make the order and sign your credit.

Some of the top E-tailers online in India:

    There are three types of online shopping sites – Focused, generic and marketplace type.  Although there is a thin line between the last two in terms of their offerings, it is better to classify them different.

  • Focused (Niche):  A customer usually logs into this site for a particular product (for ex. wines from Four seasons), or a particular brand (for ex. Reebok or Bodyshop) or a particular segment (Zovi for clothing, BeStylish for footwear, etc.).  Many retailers who have a brick-and-mortar store have an online presence and if you one who buys only from the same store or brand, this may be the site you would go to.  This type of site with the particular segment concentration can easily expand into other areas in due course and become a generic store (like Flipkart did beyond books).
  • Generic Online Mall:  Somebody who carries more than one segment even a mega store where one can shop for most of the items you would find in a departmental store, such as Flipkart, Infibeam, Myntra.
  • Marketplace (Bazaar type):  This is more like a hosting site for different vendors to put their products in and can be sort of compared to any travel site like MakeMytrip from where one can buy any airline tickets and accommodations- both work on some commission basis, such as shopping on Rediff, Tradus or Craftsvilla.   Here the seller is verified by the ratings given by the online store and these ratings give the end customers the confidence to buy stuff from them – it is important that customers give the feedback for very purchase made.

Here is a list of some popular websites today in India for shopping online: (disclaimer – these not necessarily an exhaustive list)

  • Myntra (www.myntra.com) – identified as a clothing and footwear website and carries only brand name apparels and shoes and accessories.
  • Flipkart (www.flipkart.com) – started off as an online bookstore and Indians started using it as a Noun for any online purchase of any kind, sort of an Amazon equivalent for India.  Right now they called themselves an Online mega store and offer electronics, appliances, clothing, footwear and watches to name a few. But when you say Flipkart, the shoppers associates them only for books/e-books and then for mobiles, laptops and toys. They did try to do an Apple store replica by selling mp3 digital downloads through their Flyte store which they closed down couple of weeks ago. 
  • Landmark (www.landmarkonthenet.com) –  they are into books, mobiles, cameras and toys and this is one shop that started off in the late 80s as a brick store and have managed to get into online as well which gives them an advantage in terms of  30+ years of retail experience. They are presently owned by Tata group.
  • Infibeam (www.infibeam.com) – I would say they are Flipkart competitors and give the other companies a fight for their money in their pricing.
  • Snapdeal (www.snapdeal.com) –   Again competitors to Flipkart and Infibeam.  But may a times, they do not honor their commitment and got for refund which is pretty good. I am assuming they are not able to handle their vendors well.  This is a back side route that Ebay is taking in India indirectly as I see it and they are also major funding partners for Snapdeal.
  • Homeshop18 (www.homeshop18.com) – A generic mall type like the above three, but has an added advantage in having a shopping channel on TV.
  • Jabong (www.jabong.com) – they are again into fashion, furniture and footwear.
  • India times (shopping.indiatimes.com) – a Times of India Group Initiative that carries a wide variety of things online.
  • Rediff (shopping.rediff.com) – more a marketplace concept where lots of small businesses offer their products for sale to customers. This is one site that asks for shipping charges for each and every item which can add up eventually.
  • Zovi (www.zovi.com) – a clothing and accessories only store with their own brand names and slowly adding more varieties of clothing and accessories.
  • Tradus (www.tradus.com) – a marketplace store that sells a lot of products with some good deals on a daily basis.  One of the worst customer support site based on my own experience, where they have not even bothered to reply to my umpteen emails for a defective carpet they sent me.
  • Amazon (www.amazon.in) – Debuted in Indian market just this month. Their Junglee concept has not taken off the ground and slowly evolving into a comparison site. Amazon itself may be too late to enter the Indian market, but since they are loaded with cash, they would be ready to buy some established players and consolidate their position – I can never write them off.
  • Yepme (www.yepme.com) – more positioned as a competitor to Myntra offering clothing and footwear.
  • BeStylish (www.bestylish.com) – a footwear and accessories specialized store.
  • Big Basket (www.bigbasket.com) – grocery and household goods store doing same day delivery.
  • OfficeYes (www.officeyes.com) – an office supplies company that sort of focusses only on SMEs.
  • Bookmyshow (www.bookmyshow.com) – an online place to book any of your movies, events, sports or theatre tickets.
  • Fourseasons from UB (www.fourseasonsvineyards.com) – sells wines from Four Seasons online.
  • Watch shop (www.watchshop.in) – sells branded watches at challenging prices.
  • Craftsvilla (www.craftsvilla.com) – a bazaar type store that sells crafts and furniture from artisans from around India.

As for the incubation of which city leads in establishing such online store, Bangalore has taken a lead here by seeding the Myntras, Flipkarts, Zovi, BigBasket etc. whereas Infibeam comes from Ahmedabad.  They usually have warehouses in few cities from where they ship items to the customers or deal with the manufacturers directly to get the product for the customer.

 What Indians are buying and how?

Travel constitutes nearly 3/4th of all the commercial transactions that happen online for B2C.  The days where we used to get our travel arrangements made by Thomas Cook and other local travel shops are getting numbered. Now one can buy bus tickets on redbus.in or ticketgoose.in, train tickets directly from irctc.com or yatra.com, and air tickets either through consolidators like makemytrip.com, cleartrip.com, goibibo.com or yatra.com, or directly for any of the domestic and international airlines, directly online. These consolidators are a better way to look at the options available and they pretty much give the same price as the airlines themselves. Also they are great to choose the best time of departure/arrivals, airline, lowest layovers, price, etc. If we can get the forex part online somehow as well and have it delivered at home, which is already there with most of the banks as long as you have a relationship with them, then we are all set to travel abroad just by sitting before a computer or a smartphone. Travel insurance can be taken online and procedures to get visa is listed for each embassy as well.  Based on the word of mouth, one can book for holiday packages and do what your friend or family recommended and once you have this covered, we can book them online as well.  And with a site like TripAdvisor, one can land up in the hotel of your choice based on real reviews from real people and in the price range one can afford.  So, pretty much the entire travel plans but for the actual travel can be done online.

While we grew up with ‘analog’ cameras with 24 or a 36 roll film from either Fiji, Konica or Kodak, we were so fascinated in taking photo prints of our travels or special occasions, in either matte or glossy, in either 3.5 x 5 or 4 x 6 and have them inserted into photo albums for sharing with friends and family. Whereas now except for printing passport or visa photos or wedding albums, nobody knows or interested to know such a place like a photo studio exist and we are all busy sharing the digital copies of our photos online or through social networking sites to let others know about your travelogues instantly.

Footwear:  The online stores that enable any footwear purchase are Yepme, BeStylish and Myntra.  The footwear names like RedTape, Relaxo, and even the sports shoes companies like Reebok have online presence to buy their products, either by phone or through online directly.  The problem with buying shoes online is the fitment – simply put, across the sites, the nomenclature for UK vs. Euro vs. US sizes differ.  So, if one is happy with a particular brand and knows the size and shape they are comfortable with, then this is easy to shop online for the best deal.  Otherwise, the old school of trying it in a physical store would be the best.

Perfumes and Cosmetics:  This would be an interesting online experience – although you can buy them online, you do not know how they actually smell.  Looks like IBM and some other companies are working on a technology that allows our nose to sense smell and be able to buy online.  We have always grown up by knowing that once we sniff two or three strong aromas, the nose does not get the rest right after that – this is why when it comes to perfumes as well, tried and tested works – the couple of names or flavors you and yours have accepted well is the best thing to shop.  It is recommended that duty free shops are the best places to buy perfumes and not even online.

Clothing and Designer Brands:  The non-travel, non-business e-commerce is pretty much in this area and almost every player competes here although Myntra for brand names and Zovi for its own products are well known.  I feel that Myntra today is a trend-setter in the way they are retaining the customer and playing the price factor by sending individual emails now and then.  And also since they sell quality products from brands around the world, customers do not even wink before they buy.  Also their delivery has been impeccable – always right and on time.

    Flipkart is also into clothing now although they started off as a book vendor and it is difficult to change the mindset of old customer as they associate Flipkart mostly to books and electronics.  The opposite effect would also be true if Myntra starts selling books, I would be reluctant to go them at the cost of Flipkart. Hence the ‘niche’ segmentation applies for e-tailer in terms of what ‘mind space’ each e-tailer occupies. 

    Government enterprises, like that of Jharkhand (www.buyjharcraft.com), some established silk sari stores like Rasi, Nalli, etc. as well as clothing megastore like Shoppers Shop  have made it easy for customers to buy their goods online.

Wines:  We have FourSeasons from UB and Kinvah Wines from Nandi Valley who already have an online store and they can deliver your favorite bottles home.  Some vineyards have detailed description of their products online like Grover Vineyards and Sula but not selling online yet – it would not be too long for them to do as well. Being from Bangalore, there are lots of wineries around the Nandi Hill and nearby areas which make good wine and may be easier for local population to get access to them as well directly from the manufacturer.   Since sale of alcohol is also controlled by state regulation, it is difficult to get a country-wide audience for the same as some states like Gujarat prohibit the sale of alcohol.

Chocolates:  Every local city have their own places to buy their favorite home-made chocolates  and in Bangalore, we have couple of places that I know of (surely more) – Chocolate Philosophy who takes phone deliveries and Rage chocolatier who have an online store.  Just like flowers bouquet (there are lots of florists online), the Chocolates are great gifts to be sent to your family and friends for their special occasions.

Toys: Flipkart and Landmark have a good selection but there are specialty online toy stores like Redbell that would make any purchase more fun for kids.  I wish Hamleys comes online soon, but the need of the hour is an online store which would make school life more interesting by making a range of educational toys available to purchase by the click(s).

Books (and eBooks):  The choices are many – Flipkart, Infibeam and Homeshop18 and Landmark to name a few. It is always easier to buy a book online as the same book does not differ from one shop to the other and the store that have it available and offers it at the best price wins the customer.   The old book houses like Strand and Gangaram are feeling the heat now unfortunately and stores like Sapna somehow are surviving with a good student loyalty base.  There is one retailer that is worth a mention – Landmark – they seem to have a good physical and online presence and managed to time the market right by evolving with the market condition. Strand has not been able to although they do have an online presence.  Take the case of CrossWord which is closing stores– they are not able to maintain their margins with their high cost stores.  Pretty simple, why should ANYONE buy a book at an expensive store if they get DELIVERED at a much lower price at home? 

Office stationaries and equipments:  For those SMEs, we have the likes of OfficeYes.com and PrintVenue.com that takes care of most of the customized needs.  For generic needs, Flipkart and others do have a wide range.

Spectacle and sun glasses:  Lenskart and GK Opticals seem to be marching ahead here.  Although just a small thing to do, and this is a great first step in ‘virtual trial rooms’, it is great to be able to try out different frames with your own face photo uploaded.  Then all you need to do a few selections, and the retailer comes to your doorstep with those frames, you can try them at home and select the one you need and pay for it.  Once you are done with the frame, you can have the retailer take the prescription for fitting the right glasses. 

    Like printers, where the printer is offered at a bottom price and the manufacturers make money from the cartridges, in prescription non-designer spectacles, the frames gets subsidized a little and money is made from the glasses.  It is important here to note that designer frames can be brought online for a much cheaper price as do non-prescription name brand sunglasses.  It is equally important to ensure that you go to the right place for the prescription glasses as even a small annoyance in the power can give you headaches literally. The good thing is you can get good frames to fit your needs independent of the place you get the glasses and get prescription glasses from an online store that has a physical presence too like GK opticals so that if there is any issue, you can go and rectify it immediately.

Jewelry and watches:  Again, I feel that this is an area that needs to grow and get more publicized as the market can be huge.  Some may ask what is great about watches, especially the classic analog ones.  For them, I ask have you seen how many Titan showrooms are there.  Watch is something, although it shows the same time in every hand, is a segment that can go from Rs 2000 to Rs 10 lakhs and beyond as well, depending on your affordability and fancy.  

     Many of the leading reliable pearl shops of Hyderabad like Mangatrai and Krishna, and jewelry shops like GRT and Krishniah Chetty have an online presence where they proudly display their catalog.     It still amounts to the fact that one can gloss over some the catalog items and need to visit the store to make the transaction.  But slowly there is a move from the stores that once your selection is done online, they bring the 4-5 jewels of similar kind home and then you can make a purchase sitting in the comfort of your own home.

Grocery:  I am sure within walking distance from wherever one lives, you would have a grocery store like Foodworld, More or a Reliance Fresh, or even a Hopcom that allows you to pick the right vegetables and fruits.  But for the lentils and the rice, that one gets for a month or so, either a discounted local store or the likes of BigBasket and ZopNow is a great asset – you do not need to carry these stuff home as they get delivered at the time of your choice and usually in a good condition (you can return if the condition is not acceptable) and on the same day.  Pretty soon one would have intelligent pantries and fridges at your home that informs what is needed regularly, connects it directly to an online store of your choice where you have the credit and it automatically gets delivered to you. The apartments we live in are getting smaller in size, thanks to the affordability (or lack thereof) we all have, and hence buying non-perishable products and storing it for more than a month does not make sense – in fact, more you buy in excess, more they decay.

Electronics and appliances:  Flipkart, Infibeam, Homeshop18, Snapdeal and Tradus to name a few are places you can compare and buy the right appliance, mobiles and laptops you need.  All seem to be working fine and have their own best prices for selected items and it is good for the customer to shop around between 3-4 sites before you get it delivered.   Specialty mobile retail stores like Sangeetha, The Mobile Store and Univercell all have a good online presence from where you can pick up your favorite phones.

Sporting goods:   Decathalon is a Europe based sporting goods provider that has established a niche market, both online and in physical store format.   More local online stores would be nice to have in this segment with a lower price point.

Home décor and furniture (includes Crafts):  UrbanLadder, FabFurnish and Cauvery – a Government of Karnataka enterprise (www.cauveryhandicrafts.net)  are three such sites that offer furniture and other craft items for customers to choose from.   Then there is a market place called Craftsvilla that offers products from across India from various artisans which looks unique.

Lingerie and inner wear:  This type of clothing does need some privacy to shop and what better place to shop from home either directly from the manufacturers like Lapeches or from clothing stores like Rediff and Myntra.

Entertainment tickets:  BookmyShow and TicketPro are good means to get tickets online for any event, theater or sports, and all the Cinemas like Fame, PVR, and Fun etc. have means to book your tickets online for any show within the next 2-3 days and choose your seats too.

Personalized gifts:  Zoomin, PrintVenue and other stores do cater to this population and this is a great idea for giving away corporate and personal gifts.

   I have not mentioned some trivial items like movies and music that are readily available either in media form or digitally online from various sources. Pharmacy and health care products are sensitive for online purchases, especially the prescribed ones and hence may not be a good option to do online.  That leaves Cafes, Restaurants and fast food and finger food joints and ice cream shops which cannot be experienced other than one being physically present there to enjoy.

   Something like HomeDepot that takes care of home needs (bathroom fittings, electrical fittings, lights, and construction related items) needs to happen in India so that our dependence on increasing labor in these areas can be taken care of personally with a how-to-do-guide – a nascent field for online growth.  And Education and related items would be a hot topic as Indians spend close to 30% of their salary for education of their children – this is another segment I foresee lots of changes happening and pretty soon only tablet will replace the umpteen books the poor students carry today.

    Think about the future malls as just warehouses or small fronting shops with just trial rooms and selected merchandise where you can also do online purchases of their own goods.   Every shop can even have an ATM-type front end which shows their catalog and one can just touch and shop then and there. The other shops I see in a mall of the future would be sporting places like bowling lanes, and lots of eateries.

     The biggest advantage is you can shop 24 x 7 and after you come back from office.  It can be done from your home in a relaxed manner without any stress and the entire family can participate in the purchase decision without travelling together.  The other advantages being comparison of the same product from various vendors and also better prices.

  With Mobile internet and Internet of Things (everything on the net) becoming popular, it is high time for late adopters to start getting into the net bandwagon now.  Selling directly online in India can get the wrath of the distributors and the non-brand stores as it eats up on their heavy margin.  But customer is king and this mindset change will happen through couple of totally consolidated online stores who have no baggage of the past to maintain. This would change the way we see and do things and hopefully the margins would be passed directly to customers as discounts directly from the seller and this is the day we would all wait for.

This article was compiled and written in 2013

Ref:

  1. EconomyWatch.com’s Econ Stats database – June 2013.
  2. Kleiner Perkins Caufield & Byers have released a report on Internet trends around the globe for 2012 & 2013)
  3. IMRB i-Cube 2012, All India estimates, October 2012
  4. Study by Technopak, from TechGig.com

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