Two years ago, e-commerce companies had realised that they need offline stores for deeper penetration. Although, it’s quite ironic that these companies felt the urge of leveraging offline format which they claimed inefficient.
Banking on this realisation, several startups like UrbanLadder, PepperFry, Myntra, FreeCultr, YepMe, Zovi, Firstcry tested offline channel. But the strategy is only working for a handful not all.
After FreeCultr, YepMe and Zovi, Myntra’s offline expedition is not yielding anticipated outcomes as the Walmart-owned company has shut two stores in Mumbai and Bengaluru. The Mumbai store was a franchise for well known Spanish brand Mango, and Bengaluru provided Myntra’s private label clothing brand Roadster’s products.
It had started its offline channel with the Roadster showroom in Bengaluru in 2017 and disclosed the plans to open about 100 stores of its top private label Roadster, and other brands like HRX, Mango etc.
To ramp up its offline part, the firm had also approached shop owners in malls to open up Esprit stores and cosmetic stores as well. But as per media reports, the shop owners are also complaining of no further communication from Myntra, hinting at a probable cancellation on these plans.
The reason behind the closing of stores is due to the low offline revenues and high real estate rentals. This raises questions on the market belief that an omnichannel is a better approach towards creating a brand value and increasing market penetration while creating an alternate revenue source.
Previously, Shah Rukh Khan advertised YepMe opened offline stores but failed to create a market outreach in both online and offline segments. The losses piled up so high, that it had to shut shop in 2017. Its funds had dried up, losses were increasing massively, leading to start by shutting offline stores and then executing mass layoffs.
Zovi and Freecultr had faced the same fate even before YepMe.
Since Urban Ladder and Pepperfry deal in high touch and feel segment – furniture and home decor, the omnichannel strategy (offline+online) seem to be working well. Consumers tend to see and experience such products before actual purchase.
When it comes to low ticketsize segment like apparel and clothing, the franchise model is working better than opening self-rented stores. The case in point is Firstcry. Industry experts outline that franchise-driven model of Firstcry has been performing well while Voonik claims it’s excited with the result of its first store.
At the same time, Myntra and other clothing marketplaces and brands have been failed with the omnichannel approach in growing towards initial success.