E-tailers Lenskart, Zivame, Pepperfry among others go for click-and-brick plan to up profit

With investors building pressure to churn out profits, etailers have drawn up a new strategy of poaching into the brick-and-mortar space to push sales.

Zivame, Lenskart, Pepperfry, Flyrobe, YepMe, First-Cry, and more recently Myntra's Roadster brand, are among the e-commerce startups that have opened offline stores.

"A lot of the times, online businesses go offline because raising money is a storytelling endeavour, where you need to have a pitch or a hook. It serves as a new story to raise the next round of funding, specially if your current model hasn't panned out as planned," says early stage venture capitalist Kunal Khattar of advantEdge Partners.

The struggling e-commerce sector managed to attract only $85 million in private equity and venture capital investments during the Jan-March quarter of 2017, an 89% decline compared to the $764 million received in the corresponding period last year, according to an Ernst & Young report. The report also pointed out that the sector is undergoing a lot of churn and that most businesses are in a recalibration mode.

"We realised that many of our customers who come to the website don't buy. A lot of the times, users want to try before they buy, or they are not comfortable with online shopping. India is still evolving," says Lenskart founder Peyush Bansal.

The brand opened its first store in 2014. It has 300 stores across the country, and plans to open another 200 this year.

Opening stores is also the prudent thing to do because of the sheer enormity of the offline market, according to associate director at Technopak Advisors, Shubham Anand. "If you want to grow, you have to be offline as well," he explained.

India's internet penetration is 31% as of December 2016, according to Internet and Mobile Association of India. This leaves over 900 million Indians who do not use the internet.

"At the end of the day, you have to follow your customers… It seems like omni-channel is the way ahead and that's why offline players are going online, and vice versa," says Anand.

Founders of these startups say the stores are also for allowing users the much sought-after touch-and-feel experience.

"The online space is becoming so crowded, and largely driven by discounts. So, people have doubts about fashion products. Ours is a highstakes category, and we can build trust by allowing people to touch and feel the garments," says Flyrobe co-founder Shreya Mishra.

The designer wear rental startup has recently opened its first store in Mumbai, followed by two in Delhi and one in Hyderabad, with plans to open more.

Even if the stores don't always yield sales, they help convert footfalls into sales online, founders say. "It's about trying the frames offline and ordering them online. We don't really sell as many products over the counter. Customers book orders in the store to place an online order," says Bansal. Together, the stores record 15,000 footfalls every day, he says.

However, he refused to reveal how many users visit the site or how many of those translate into sales.

However, Khattar cautions against the same management operating both mediums because they require different skill sets.

"A successful online player should either merge with or invest in offline businesses separately, but build strategic links between the two to execute a successful clicks and bricks model."