Online retailing is forcing books & music stores to shut down: CRISIL Report
Updated: Feb 25, 2014 03:48:06pm
New Delhi, Feb 25 (KNN) A Crisil Research Report has said that many books and music stores are being shut down by their companies as they are finding it increasingly difficult to compete with online retailers who offer huge discounts.
“…companies focused on books and music are closing down many stores or even shutting down completely because they are unable to compete with the huge discounts offered by online retailers. Online retailers also play the volume game through shopping festivals several times a year to spur sales, which is difficult for the physical retailer because of realty and inventory costs,” the report said.
What is also working for online retailers, according to the report, is the growing satisfaction with the transaction experience they afford: customers don’t have to physically travel to stores, get a fairly good idea about the products browsing in the comfort of their homes and office, pay on delivery, and also get their money back – no questions asked – in case of dissatisfaction.
CRISIL Research, an independent and integrated research house, estimates that online retailing -- both direct and through marketplaces -- will become a Rs 500 billion industry by 2016, growing at a whopping 50-55 per cent annually over the next three years.
That would be over 30 times the size at the end of fiscal 2008.
The segment, the report said has been growing like gangbusters in India, with revenues surging from around Rs 15 billion in 2007-08 to an estimated Rs 139 billion in 2012-13 – or a compounded annual growth rate of 56 per cent.
While it points out to the fact that online retailing remains a nascent portion of the overall e-commerce segment in India where the travel business dominates with about two-thirds share, the equation, it said is changing fast enough to pose a threat to brick-and-mortar retailers -- not just of books, music and electronics, but also apparel and grocery.
Over the past 4-5 years, competition from online retailers such as Flipkart (in books, music and electronics) and Myntra and Jabong (in apparel) has hurt physical retailers, forcing many to also go online -- even as their net store additions have declined.
Similarly, in the perishables market, e-commerce companies such as BigBasket and Localbanya are posing a strong challenge with their ‘call-order-deliver’ model.
Says Prasad Koparkar, Senior Director – Industry and Customised Research, “Eventually, just the way it happened in the US, physical retailers will have to establish a presence online. And, with the right strategies, they can even compete effectively. For instance, to tackle the queue problem at its stores, Wal-Mart allows customers to shop online and opt for either home delivery or store pickup. Today, Wal-Mart is among the top online retailers in the US. This shows how it can be done.” (KNN/ES)
“…companies focused on books and music are closing down many stores or even shutting down completely because they are unable to compete with the huge discounts offered by online retailers. Online retailers also play the volume game through shopping festivals several times a year to spur sales, which is difficult for the physical retailer because of realty and inventory costs,” the report said.
What is also working for online retailers, according to the report, is the growing satisfaction with the transaction experience they afford: customers don’t have to physically travel to stores, get a fairly good idea about the products browsing in the comfort of their homes and office, pay on delivery, and also get their money back – no questions asked – in case of dissatisfaction.
CRISIL Research, an independent and integrated research house, estimates that online retailing -- both direct and through marketplaces -- will become a Rs 500 billion industry by 2016, growing at a whopping 50-55 per cent annually over the next three years.
That would be over 30 times the size at the end of fiscal 2008.
The segment, the report said has been growing like gangbusters in India, with revenues surging from around Rs 15 billion in 2007-08 to an estimated Rs 139 billion in 2012-13 – or a compounded annual growth rate of 56 per cent.
While it points out to the fact that online retailing remains a nascent portion of the overall e-commerce segment in India where the travel business dominates with about two-thirds share, the equation, it said is changing fast enough to pose a threat to brick-and-mortar retailers -- not just of books, music and electronics, but also apparel and grocery.
Over the past 4-5 years, competition from online retailers such as Flipkart (in books, music and electronics) and Myntra and Jabong (in apparel) has hurt physical retailers, forcing many to also go online -- even as their net store additions have declined.
Similarly, in the perishables market, e-commerce companies such as BigBasket and Localbanya are posing a strong challenge with their ‘call-order-deliver’ model.
Says Prasad Koparkar, Senior Director – Industry and Customised Research, “Eventually, just the way it happened in the US, physical retailers will have to establish a presence online. And, with the right strategies, they can even compete effectively. For instance, to tackle the queue problem at its stores, Wal-Mart allows customers to shop online and opt for either home delivery or store pickup. Today, Wal-Mart is among the top online retailers in the US. This shows how it can be done.” (KNN/ES)
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