Brick-and-mortar stores look to online retailers to expand reach

Croma, a Tata Group-promoted electronics retail chain, has tied up with online marketplace Snapdeal wherein both would sell certain products exclusively at Croma stores and retail those items also on snapdeal.com where Croma has set up an exclusive shop. Croma would also be selling its own products on the portal.

This is a part of working towards an omni-channel strategy, which essentially means retailing through multiple channels such as the web as well as brick-and-mortar stores. Currently, products from other brands include a tablet model by Lenovo and a mobile phone model by Karbonn, which would be sold exclusively by them. "We are in talks and we will have more such deals going ahead," said Ajit Joshi, CEO & MD, Croma, Infiniti Retail, without disclosing other names.

With this tie-up, however, there would be one thing that all the orders would be fulfilled by Croma's distribution centres and delivered using Snapdeal's delivery capabilities. The areas around its existing stores, currently numbering 96 in 16 cities in India, could be catered to by the stores themselves.

A fairly similar announcement was made earlier this month wherein Future Group's Kishore Biyani said the company will invest Rs 100 crore in an e-commerce initiative and will utilise the existing merchandise at its stores, and distribution centres, to fulfil orders that come through from customers.

What brick-and-mortar retailers have been attempting recently tells us how they are considering the use of omni-channel retail for more than just reaching out to a larger customer base. The companies are looking at using their existing warehousing capabilities to ensure efficient distribution of existing merchandise and, in turn, avoid a lot of reverse logistics. Brick-and-mortar retailers are in a way ensuring that their existing inventory can be utilised as well as managed better.

On the one hand, Snapdeal, which connects with 5,000 cities in India, would help increase the reach for Croma. On the other, it would also provide Croma with data and information on which products are working well, along with the geographies where they are working best. The same would happen for Future Group, which would keep getting instant information of the product flow through its online channel.

This would essentially help them manage the supply chain better wherein brands would now be able to replenish inventory faster and much more accurately, rather than getting a chunk of inventory stuck in the pipeline. "The supply chain advantages are far more interesting for a brand," says Snapdeal Co-founder and CEO Kunal Bahl. "It helps them to more appropriately ascertain the demand for a particular product geographically," he adds.

A similar thought was expressed by Future Retail's Joint Managing Director Rakesh Biyani. "I hold inventory in 180 doors today, and all of them do not perform at the same level," says Biyani, talking about the technology being brought in that would enable the company to gauge the demand and replenish accordingly, and also utilise the existing inventory to service demand from the online channel.

Under the online initiative, Big Bazaar would be able to take orders from various parts of the country and fulfil it from its distribution centres, or stores closest to the location. The company currently houses about 160,000 stock keeping units in its stores. However, the one thing that would boost these initiatives immensely is the implementation of the goods and services tax, say both Joshi and Biyani.