The shift towards brick-and-mortar stores is in full swing. Just look at Mamaearth, the digital beauty and wellness company. As The Ken pointed out, its physical store sales are contributing big time to its topline. From just 9% in March 2020, it has soared to 35% by September 2022. Mamaearth is fast becoming a typical brick-and-mortar business. (View Highlight)
People claim the future is online. That consumers prefer convenience from the comfort of their homes. Also selling online is a gateway for data aggregation. You know how long your customers are hovering over a page. You know what items they’ve added to a cart. You know what they’re buying. And you can track it all in real-time and keep churning out the best sellers.
And not to forget, they don’t have to invest massive sums in setting up and running a retail store. There are no exorbitant rents. There are no wages for staff who otherwise have to handhold customers. And there’s little maintenance. (View Highlight)
For starters, when a D2C company begins to make a name for itself, you get a lot of copycats jumping in too. Everyone wants a slice of the great Indian consumer market with 130 crore people. But it’s not really so many people. At best it’s around 4 crore people. Because as we’ve written earlier, “Some estimates suggest that only 3% of Indians take home an annual salary of more than ₹5 lakhs.” (View Highlight)
And with every D2C brand targeting the same set of people, you have to think about customer acquisition. The way everyone goes about this is by splashing ads on social media platforms. And if you’re a fledgling D2C brand that’s making waves, you also have to deal with competitors with more cash cannibalising your brand. Rivals will take out ads with keywords that might include your brand name. So when people search for your brand, they’ll probably see your competitor right at the top. It drives the marketing cost upwards. (View Highlight)
So if you’re sinking a lot of money in acquiring new customers online, why not just do it offline?
Because the truth is — maybe offline is simply worth it in the long run. (View Highlight)
Well, a few years ago, professors at Wharton and Harvard delved into this phenomenon and found something quite interesting. Customers who visit a physical store spend more money. In fact, they spend 60% more on average per order. They’re willing to splurge on higher-priced items. Instead of simply buying casual T-shirts, they might spend more on buying formal shirts. They’re expanding their shopping basket. (View Highlight)
It’s not just that. These customers even frequent the store more often. And they’re not window shopping. They’re taking out their wallets — the time between purchases also dropped by 28% versus online shoppers. (View Highlight)
The cherry on top? They also don’t return products as much. The sale is done and final. (View Highlight)
