Writankar Mukherjee & Sagar Malviya, The Economic Times
Kolkata/Mumbai, 19 Jun 2015
The Tata Group will launch the country’s first hybrid online retailing venture, a combination of a portal that will list brands and handle payment transactions and brick-and-mortar stores that will set prices, deliver products and provide customer support.
Group firm Tata Industrial Services, which changed its name to Tata Unistore Ltd, will spearhead the venture that’s likely to be piloted before the Diwali shopping season. The venture’s brand name is yet to be finalised.
The salt-to-software conglomerate is in advanced talks with top brands across categories to complete the integration with their offline stores, with major focus on smartphones, consumer electronics and fashion, which account for 80% of e-commerce sales in India, said five senior executives, two of whom are attached with the group. Even in rural areas, orders will be dispatched by designated offline stores.
"The Tata e-commerce venture will act as a frontline sales hook for offline stores and will play on customer experience, assured aftersales support and wide reach. It is expected to drive sales of high-ticket items whose online sales are still limited," one of the Tata group executives said.
A Tata Group spokesperson said, "Indeed e-commerce is of interest to the Tata Group. We will share more information at the appropriate moment."
Unlike online entities Flipkart and Amazon, which push sales through deep-discounts, Tata’s venture will not indulge in price wars. Discounts will be decided by the brands and won’t vary much from their in-store promotions. Unistore officials have informed brands they should not sell below the price at which they sell to retailers.
"The integration of the brand’s offline stores will mean there will be no conflict among the trade partners at all," the Tata executive said.
"Online with an offline plug does make a difference and their model looks sustainable and legitimate," said Devangshu Dutta, chief executive officer at retail consultancy Third Eyesight. "Discounting isn’t a sustainable model and many players have started to realise the pitfalls of attracting consumers just through pricing."
The venture will ensure complete warranty and after-sales support for categories such as smartphones, televisions and appliances, a stark difference from products sold online that don’t always come with such benefits. For categories like apparel, customers will be able to exchange the product, pick the correct size or return it at the nearest offline store.
While Tata Unistore officials have tried cutting exclusive deals with leading brands such as Apple, Samsung, Sony and LG, it remains iffy. "Instead, the brands are ready to offer exclusive models," an official said.
The country’s e-commerce market is expected to quadruple to $60-70 billion in the next five years, according to the Boston Consulting Group and the Retailers Association of India, boosted by increasing Internet access through affordable smartphones and efforts by online retailers to develop payment channels such as cash on delivery, mobile wallets and streamlined logistics infrastructure.
Brick-and-mortar companies including Future Group, Reliance and the Aditya Birla Group are planning online retail initiatives across product categories to take advantage of the increasing adoption of e-commerce.
Tata’s venture will have a separate section for group brands such as Voltas, Westside and Titan, while the online stores of its companies like Croma will continue as separate entities. As part of the plan, the new venture bought Landmark E-retail Ltd from group company Trent for Rs 14 crore.
(Published in Financial Express.)