Brick and Mortar Stores and online Stores - Can They Co-Exist?

Analytical Project

Brick and Mortar Stores and Online Stores- Can They Co-exist?

Submitted By:

Megha Aggarwal- 229

Sumit Verma- 270

Mukul Kumar Gautam- 232

Akshdeep Singh- 206

Table of Contents

1. Background……………………………………………………………………………………………………………….3
2. Motivation…………………………………………………………………………………………………………………4
3. Objectives………………………………………………………………………………………………………………….5
4. Evolution and growth of Ecommerce in India…………………………………………………………….6
5. Literature Review………………………………………………………………………………………………………9
6. Model Comparison: Ecommerce vs Brick-and-Mortar………………………………................14
7. Impact of Ecommerce on Select Sectors………………………………………………………………….17
8. Research Methodology……………………………………………………………………………………………27
9. Can Ecommerce and brick-and-mortar coexist...........................................................30
10. References………………………………………………………………………………………………………………32
11. Appendix…………………………………………………………………………………………………………………33

Background

Talking about the trade i.e. the exchange of commodity, the first things that comes in the mind is a shop where one procures thing in exchange of money notes. A shop is nothing but a structure made out of brick and mortar. The concept of brick and mortar shops dates back to earlier concepts of stalls which evolved through time into the modern day shops. It’s a business with physical presence providing tangible buying experience to the customer. What drove the concept of brick and mortar to success is the convenience of the customer and experience where one has the liberty to feel, see and purchase the merchandise.

The concept evolved with time and the next phase of this process that is teleshopping was introduced where Michael Aldrich, an English entrepreneur connected television and a transaction processing system through a telephone line. This filled the latent need for shopping from a distance and gave an idea on how to create a network between the agents, distributors and customers using the technology. The technology further evolved and throughout the 90’s, due to the development of the internet and deregulation of financial markets, many corporations involved in doing the business online which provided them with large markets and huge customer base.

In 1995, Jeff Bezos launched Amazon.com, world’s first and present day largest internet based retailer in the world. Another online retailer eBay was launched by Pierre Omidyar which at present has operations in around 30 countries. In 1996, Indiamart, a Business to business marketplace was launched in India. Within the time, these huge internet based market places came to be known as e-commerce. In the next one decade, many e-commerce platforms opened across the globe. Amongst them are the Flipkart and Snapdeal, two Indian majors in the domain. Flipkart was started as a web platform to sell books online by two IIT’ians – Sachin and Binny Bansal. The company grew tremendously and diversified itself into other product categories and has a valuation of 15 billion dollars at present. Snapdeal was started in 2010 and went online in 2011. Initially their main concentration was on offering deals and later they also diversified like Flipkart. It is the largest online marketplace in India. Along with other online market players like ShopClues, Paytm etc., e-commerce contributes to nearly 3% of the retail business in India and with the increasing network penetration and positive business environment, it is expected to grow much larger. And this has triggered a big debate on the co – existence of the two approaches of e-commerce and brick & mortar shops.

Motivation

India is a really big market with varying demographics and behavior and to cater that, with each passing days, people are coming up with innovative ideas. For the retail sector, companies like Flipkart and Snapdeal are coming with innovative ideas ranging from same day delivery to the drone delivery of the product. In property sector, we have housing.com, 99acres.com which looks after the space needs of the customer. Along the line, other innovative concepts of online grocery store like Grofers.com and online matrimonial services like shaadi.com and many more comes with a niche concept to provide convenience to customers. The variety in concepts and the strategies used by the companies in establishing themselves intrigued us in taking up this as a subject for our research project. These companies have driven convenience to a level where at a press of a button we can do whatever we want: shop, ordering a cab, tutorials etc. It would be very interesting to draw parallel between the two: e-commerce and the traditional brick and mortar shops and how in the future both the approaches turn out to be.

Objectives

The objectives of the project are:

1. To study the evolution of e-commerce in India.
2. To study the growth trends of various e-commerce sectors and major players in India
3. To understand the difference in the models of brick and mortar and ecommerce industry
4. To understand the varying degree of impact that e-commerce has had on brick and mortar stores
5. To understand consumer behavior behind choice between e-commerce and brick and mortar stores
6. To understand the reasons behind the reverse trend of ecommerce websites setting up brick and mortar store
7. To determine the future trends in ecommerce and conventional stores and predict if they can co-exist

Evolution and growth of Ecommerce in India

Evolution of Brick and Mortar

Brick and mortar stores have been in the country for time immemorial. What existed in the pre- independence era as small and medium kirana stores have morphed into huge retail chains like Big Bazaar.

Evolution of ecommerce

By definition, ecommerce means the buying and selling of goods and services over the internet. The earliest example of ecommerce is Amazon, started in July 1995, when Jeff Bezos sold the first book on Amazon.com. Within 30 days of operations, Amazon had sold books to online shoppers in all 50 states and 45 countries. Soon afterwards, it became the most popular website for online shopping.