Tata’s foray into e-commerce with a 25-year plan

The Tata Group have just forayed in to e-commerce with the name TataCliQ.com. But for the very first time the management of the retail firms Infiniti Retail and Trent, the Rs 2200 crore listed entity, would be working together to make the e-commerce foray a success. This is part of an omni-channel experience for the consumer. Finally, brick and mortar retail is opening its wings to win the consumer on all the channels of sales. TataCliQ.com allows customers to buy products online which can be returned in any of the physical stores - Westside or Croma.

"This is a first-of-its-kind phygital e-commerce marketplace brings to India a smart combination of the reassurance and in-store experience of a large on-ground network with the convenience of online shopping, bringing the best of both worlds together,” says Cyrus P Mistry, Chairman of the Tata Group.

Talking at the sidelines of the press conference Ashutosh Pandey, the CEO of TataCliQ said that e-commerce must be a brand focused business to last for the long term. "Consumers need to experience the brand. Our platform will focus on building a 20 plus year business," says Pandey. He adds that focusing on discounts - as a strategy - is not going to build a long term business. "The problem with current online business models is that the revenue model is loss making, the moment discounts stop, the consumer will not come back to the platform," he says.

Other large retailers, like the $3-billion Future Group, the $1.6-billion Arvind Group, the $200-million Aditya Birla Fashion and the Dubai-based $5-billion Landmark Group, have all been implementing pilots to make their supply chain dynamic and ready for the new world. They are doing so by linking their physical stores—functioning as suburban last-mile ports—to service the customer, who is either ordering on the web or via the smartphone. Of these, Aditya Birla Fashion and Retail has two e-commerce firms - Abof.com and TrendIn.com.They are already working on connecting all their stores to a hybrid shopping world. “E-commerce is very important for the group and we are looking at various strategies for its growth,” said Kumar Mangalam Birla, Chairman of the Aditya Birla Group, on the side lines of a press conference.

Retail chains like the $650-million Shoppers Stop and the $625-million Lifestyle International (Landmark Group) too have been building their technology architectures that can support their stores to function in a hybrid world of web, on smartphones and connected stores.

Selling Private labels the key

Tata’s retail outfits have been known to have a high level of private labels, almost 75 percent in apparel and 30 percent in electronic items. This private label strategy is where brick and mortar can take on e-commerce in pricing and range of catalogue.

Private labels account to at least $5 billion sales in India.

The Boston Consulting Group and Retailers Association in a report called ‘Retail 2020: Retrospect, Reinvent, Rewrite’, say that the retail industry would be a US$ 1 trillion market by 2020 from US$ 600 billion in 2015. “Consumption is only growing in India with urbanisation,” says Kishore Biyani, founder of the Future Group.

Boston Consulting Group says that the market will grow by 12 percent per annum and modern trade would expand twice as fast at 20 per cent per annum.The traditional trade will grow at 10 per cent.

The report further adds that retail spending in the top seven Indian cities amounted to Rs 3,58,000 crore (US$ 53.7 billion). Online retail is expected to be at par with the physical stores in the next five years. Omni-channel is at the centre of this consumer universe. It will also bring brick and mortar retailers access to a lot more consumers.

The Indian Brand Equity Foundation says India is the fastest growing e-commerce market, driven by robust investment in the sector and rapid increase in the number of internet users. The IBEF says that Indian e-commerce sales are expected to reach US$ 55 billion by 2018 from US$ 14 billion in 2015. Further, India's e-commerce market is expected to reach US$ 220 billion in terms of gross merchandise value (GMV) and 530 million shoppers by 2025, led by faster speeds because of reliable telecom networks, faster adoption of online services and better variety as well as convenience.

E-commerce is here to stay and so is omni-channel.