Offline stores take on the online challenge
Online shopping has taken off in India, and I’m a big fan. But with more people deserting physical stores (offline shopping) for online shopping, I worry about online giants like Amazon killing off the offline enterprises and becoming all powerful. At which point, we will find ourselves at their mercy, and have to take whatever they offer, at whatever price they ask.
That is why I was quite pleased with what happened a few days ago. I was trying to book a flight at a budget airline’s website. Tickets were freely available for the up journey but the return ticket was hard to find, and expensive. Probably because the day I wanted to travel on was the day on which schools were reopening in India after the summer break.
Now I could have gone to other individual airline sites and compared prices but it would take time. Instead I used a travel app called Cleartrip. In a few moments, it located an Indigo flight ticket that was half the price. It was not a direct flight but that was fine as the savings were substantial.
As I was about to go ahead and buy the ticket, it struck me that I should check the price on the Indigo airline site. It turned out to be ₹500 cheaper than on Cleartrip. I couldn’t think of any reason to justify paying Cleartrip that extra ₹500, so I went ahead and booked the ticket on the Indigo.
Though Cleartrip did all the hard work of locating the ticket for me, and got nothing for its pains, I didn’t feel sorry for them. Instead it felt like poetic justice as Cleartrip was only getting a taste of what online enterprises like it have been doing to the offline stores.
In fact, this practice where customers see and feel a product at an offline showroom, but order it from an online store at a cheaper price has a name - Showrooming. In this case, I went online to check out prices at the Cleartrip ‘showroom’, but bought the ticket from the airline, Indigo. In effect, this was a kind of reverse showrooming.
Indigo seems to have realised the wisdom of that old saying, ‘If you can’t beat them, join them.’ So instead of fighting the online marketers, they joined them. They did this by selling tickets directly on their own website to keep prices down, thereby avoiding the overheads costs of having an office, and paying commissions to a travel agent.
Other brands are also adapting to the changing market scenario.
I was recently in the market for an Android, as my existing Mi4i wasn’t working too well with the VoLTE version of 4G. Androids come in a mindboggling variety of specs. So I figured out the best way to narrow down on a phone, was to set a budget, and then pick the phone with the best customer reviews on Amazon. Since the Android was my secondary phone, I didn’t want to spend more than ₹10000 ($150) on it. I knew I could sell off my Mi4i for around ₹4000, so that meant my actual budget was ₹14000. After going through reviews, Xiaomi’s Redmi Note 4 came out as the frontrunner in that range.
But there were two issues at Amazon. For some reason, Amazon doesn’t offer an exchange scheme for old phones in my area. Secondly, the Redmi Note 4 is only available on Flash Sales, on the Mi site and Flipkart (Amazon’s competitor). The exchange problem solved itself when I managed to sell my Mi4i in no time with an free ad on OLX. The Flash Sale was a bit more problematic but after a couple of tries, I finally managed to snag the phone on the Mi site.
In effect, Amazon had acted as the showroom for Xiaomi.
Xiaomi’s success as one of India’s top selling phones, offers a clear lesson to other brands. One factor in this success is their online flash sale model instead of a traditional showroom method (though they just opened one in Bangalore that’s modelled on the Apple Store). This saves costs, which they use to create a better product. I find the Redmi Note 4’s design comparable with an iPhone, which is several times more expensive. Apple’s iOS still has an edge but Android is catching up.
Another thing offline stores are doing is literally joining the competition. Xiaomi recently tied up with Amazon to launch their Redmi 4 phones on Amazon. I may not buy the phone from the Xiaomi website but at least I’m buying a Xiaomi phone. Hush Puppies is also following this route. For the last few years, I have been using their sandals. But they are a bit expensive so I have been thinking of switching. That is, until they appeared on sale on Amazon recently. Now I know where to get my next pair of sandals.
If other offline enterprises can adapt to the changing times by taking advantage of the possibilities of going online, they too can flourish. Look at it that way, Indigo is not doing too much online, but just having a presence online helped it clinch a sale from me.
In a way, that is comforting. If Xiaomi could figure out how to adapt to the times, so will other offline enterprises. That will help balance the dynamics of the free market, and prevent an Amazon from becoming too powerful.
It’s not just offline stores that are standing up to Amazon. Other online competitors are doing the same, and that’s all to the good as there’s nothing like competition to keep a player honest.
Some time back, I was looking to buy a spin bike, and located one on Amazon. The manufacturer didn’t have a website so I went back to Amazon, read the reviews, concluded that it met my needs, and put it in my shopping cart. But before clicking buy, I went to Flipkart, Amazon’s competitor to see if it had the product. It did, and what’s more, was offering a discount of ₹3050 ($50) if I paid with my SBI credit card. I took the Flipkart deal.
Offline or online, one thing has not changed. When money talks, I listen.
