Wednesday, January 07, 2015

Shall E-Retailers Developp Brick& Mortar Activities?

Obviously, it will be one of the most interesting trend of 2015: The increasing merger of online activities and brick & mortar activities.

Indeed, brick&mortar retailers are focusing now their strategies on earning marketshares online.
As Georges Plassat, CEO of Carrefour, pointed out lately, traditionnal retailers have an edge on e-retailers as they already own a store network, which is actually quite difficult to develop right now for new comers, as legislation and new projects are limiting the expansion.

But E-retailers are eager to create stores. Here is an interesting article I found on this topic, giving couple of examples of e-merchants who have opened some stores.

But this is a very interesting question on how E-merchant strategies want to develop their brick&mortar activities.

Indeed, managing a store network and retailing in the real world is a different activity than the online one. The way they manage inventory and opertionnal costs is very different.
Moreover, the promess they may have online (large product range, merchandising, customer service through adaptable delivery options) are quite different.

Obvisouly, it is a big challenge for e-merchants, as the online market becomes mature, one great way to grow is to compee with the brick&mortar. But with what kind of strategy? 

Here are some of the strategies they may have:
- Having a showroom, allowing customers to test products. But it will be difficult to have a nationwide strategy with only showrooming as it will only imply a higher cost of operations.
- Proposing extra services, in small places: reparation, customization of product, delivery. So far I have not seen much of it.
- Proposing products that tend to be difficult to retail online: I am thinking about breakable products, or too large products to be shipped. It could create extra sales and to limit the impact on the online activities.
- Make joint ventures in other retailers, such as hypermarkets, department stores, among others. It could help the joint venture to work better some categories where he would be weak, and for the e-retailer to set up fast a presence in a large chain.