© 2019 IJRAR February 2019, Volume 6, Issue 1 www.ijrar.
org (E-ISSN 2348-1269, P- ISSN 2349-5138)
A study on Offline retail vs. Online retail and
future of retail in the age of Digitalization
Ms. Cassandra Ranee,HOD, Department of Management,St. Claret College,Bengaluru
Ms.Jennifer.M,Assistant Professor, Department of Management, St. Claret College, Bengaluru
Abstract
A retail sale occurs when a business sells a product or service to an individual consumer for own
use. Retail trade can be of two types. Firstly, Traditional store based retail outlets which use fixed
location to sell goods and for post sales services. Secondly, Modern Non-store E-commerce retail
businesses through use of smart gadgets. There is a recent pressure on traders and customers to make a
choice between traditional bricks and mortar selling or selling online through an Ecommerce store.
Presently consumers are tech savvy and more sophisticated. They have exposure to multiple channels
before making their crucial purchase decisions. They are well informed with readymade data relating to
vendors, products, ratings and reviews. It has become crucial for retailers to keep the customers aware of
updated information at selected touch points. In present world, all the forms of media whether it is smart
phones or smart televisions or any smart appliances does not encourage the customers to go to retail store
for purchase. Many of the Offline retailers are downsizing or shutting down their business due to the
growth of Ecommerce. As Ecommerce grows, physical stores must change and need not shut down. This
study aims at making a comparison between online and offline retail and the factors which motivate the
customers to choose between traditional or technological shopping. In Ecommerce retail, at times search
engines are unintelligent. If you search for suit, it shows body suits or swim suits. Such unintelligence is
fixed by Artificial Intelligence. When search engines understand customers, online shopping becomes
more convenient and easier. Understanding customers needs and preferences under digitalization can be
successful by Artificial Intelligence and Virtual Reality. The objective of this study extends to study the
growth of online retail and to know the future of online retail in the ever growing technological
transitions.
Keywords: Digitalisation, Offline Retail, Online Retail, Artificial Intelligence, Virtual Reality
Introduction
The retail supply chain includes manufacturers, wholesalers, retailers, and the end consumers (end
user). The manufacturer sells the goods to wholesaler, who in turn sells it to retailer and the retailer will
sell it to customers finally. Some of the world’s largest retail companies like Walmart, Amazon directly
deal with manufacturers, without the need for a wholesaler in the middle of the transaction. Retail means
sale of goods to the public in relatively small quantities for use or consumption rather than for resale
purposes. Retailers are the final link in the supply chain between manufacturers and consumers. Retail
selling could be made in a brick-and-mortar retail store or an Internet shopping website. Due to the
technological developments retailers get good opportunities to reach the customers in much faster, easier
and economical way. In the present world, internet holds the attention of retail market. Many people
prefer online shopping. On the other hand retail stores also continue to survive and many people prefer to
get the touch, feel, smell of the product and get immediate possession after payment for the product.
Some go for offline shopping, some for online and many choose both modes of shopping. Customers
have to decide the channel which best suits them to satisfy their shopping needs. Nowadays, the most
popular activity over internet is online shopping. People get carried away in online shopping than
watching internet for entertainment or messaging or collecting information by web browsing. Prospective
customers are attracted by the readymade information and reviews about the product they wish to
purchase. As online shopping is growing enormously, what will be the future of it? What new
technological changes are waiting to satisfy the ever growing customers?
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Review of the Literature
Shafeeq Ur Rahaman, Noel Merwyn Badugula, Te-Wei Wang and Neethu Chithralekha
Somarajan, (May 2018)states that, the significance of customer’s conduct has developed
exponentially in the previous decade. The level of time and cash that businesses will contribute
clarifies the effect of clients' recognitions towards e-commerce.
Raymond R. Burke, (June 2018), asserts that, innovations will continue and consumers
expectations will continue to change. Increase in the level of consumer education and knowledge
of technology will definitely increase in technology adoption by consumers. However retailers
must adopt technologies cautiously to create a solution to consumer’s problems rather than just
technical innovation.
Fei Gao and Xuanming Su, (August 2017) insists that offline sales is not suitable for all types of
products and it is not wise to implement online sales for the products that sells well in offline
stores. Though customers get information about products online, customer satisfaction is attained
only in offline store transaction.
Dr. S. Vinoth and Dr. D. Dilip, (August 2018) reveals in the research that the customers are
neutrally satisfied over online purchases and online shopping significantly influences customer
satisfactio
Traditional Brick and Mortar, Offline Retail
Offline retail is a traditional method of face to face sales to customers under traditional bricks and
mortar. Example: Big bazaar, Girias, Pai Electronics, Adhiswar, Sangeetha mobiles. It is the presence of
physical structure of an organization. Offline shopping has existence since the existence of mankind.
Offline shopping gives different types of benefits to the retailers and the customers.
Online Retail or E-commerce
“E-commerce is buying and selling of goods and services, or transmitting funds or data using
electronic network like internet between business to business, business to consumer, consumer to
consumer or consumer to business”. The terms e-commerce, m-commerce, e-business or e-tail is also
used for online shopping. Example : amazon, flipkart, shopclues, snapdeal.
History of online shopping
In 1979, Online shopping was invented by an English entrepreneur Michael Aldrich. Sir Tim
Berners invented the World Wide Web in 1989. 1994 was marked as the year of online commerce world
wide and first internet shopping transaction was made. Also online banking, online pizza by Pizza Hut
emerged during the year. Amazon launched its first online shopping website of the world in 1995,
followed by eBay. In 1998, Google entered the world of ecommerce and yahoo4 launched yahoo store
online. In India, IRCTC website for online ticket booking was introduced in 2002 and further in 2003
online ticket booking system was brought by Air Deccan, Indian Airlines and Spice jet. In the light of
ecommerce, Flipkart initiated online sales in 2007, followed by Amazon, Snapdeal, Jabong, etc. Online
shopping, when introduced had only fewer options, but now it has become a trend in India. Attractive
online stores, easy payment methods, user friendly websites and interfaces, unlimited choices of brands
and varieties, etc has fascinated many internet users to become loyal customers to e-business. Though
India is a developing country and it is far behind US and UK market, there is a commendable increase in
ecommerce industry in the recent years.
Statement of the Problem
Recently, customers involve in online discovery of products and end up with offline purchase
transaction in the nearby stores or outlets. Majority of shoppers look up the products online but buy them
in physical stores. Customers want an unified experience across offline and online shopping. It is a win
win situation for both retailers and shoppers. Although offline shops retain their customers by providing
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satisfactory services, the number of ecommerce users are increasing in a lightening phase. This study
discusses on finding the reason why online shopping is booming even though traditional retail stores are
still surviving in the market and exploring the future technologies of online retail.
Objectives of the study
1. To compare the offline and online methods of business and to know the reason for growth in etail
in recent years
2. To explore the future developments of Ecommerce in the age of digitalisation
Research Methodology
This study is descriptive and theoretical in nature. Secondary data are collected from various
journals, article, books, websites.To make a choice between offline retail or online retail is a challenge for
retailers and the customers. A fair choice can be made among by valuing both the systems.
Comparison between Offline Retail and Online Retail
Point of Differences Offline Retail Online Retail
Cost Higher setup and running Requires less initial
cost investment and operating
expenses are minimal
Time Time consuming as it Time saving as shopping can
involves physical reach out be done in one click using
for the stores internet
Market Coverage Limited coverage as it International coverage and
attracts only consumers instant access to passing
locally trade
Convenience Less convenient as time of More convenient as
operation of stores is limited shopping is possible at any
time
Product Tangibility Customers always can see, Highly intangible as product
touch, smell, feel and try the cannot be touched, felt and
products smelt
Customer Experience More satisfied experience Partially satisfied experience
Authenticity Highly reliable as trust is Unreliable about the quality
placed on the shopkeeper and delivery
Bargaining Always possible Impossible
Choice of products or Limited varieties of brands, Unlimited choices from
services colours and sizes local to international
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Offers and Discounts Only during clearance sale Regular seasonal offers and
discounts
Price Flexible as prone to Fixed price and cheaper as
discounts and bargains and operating costs are less
higher prices due to higher
operating costs
Growth of Ecommerce
When valued, both offline and online retail businesses have their own merits and demerits and
implications on consumers choice. Though there are numerous offline retail stores running successfully
since many decades, there is a tremendous growth of ecommerce in recent decade which has affected the
traditional bricks and mortar sales. According to the statistics published by statista.com, the number of
online shoppers in India in 2014 was 54.1 million, from 2014 onwards there is a constant increase in the
growth in online shopping showing an average increase of 43.70% for 5 years from 2014 to 2018. It is
also estimated to reach 273.6million in 2019 and 329.10 million in 2020 thereby showing an increase of
49.5% and 55.5% respectively.
Table showing the number of Ecommerce Shoppers in India
Year No. of users(in Increase (in Millions) % of yearly increase
Millions)
2015 93.4 39.3 72.64
2016 130.4 37 39.61
2017 180.1 49.7 38.11
2018 224.1 44 24.43
Source : www.statista.com
As per the report by the Internet and Mobile Association of India (IAMAI) issued in The
Economic Times, article dated February 2018, states that the internet users in India in December 2016
and December 2017 are 432 million and 481 million respectively, showing an increase of 11.34%. Also
the Internet penetration in Urban and Rural India are shown in the below table
Percentage of Internet users in Urban and Rural areas in India
Year Urban India Rural India Total users
(in millions) (in millions) (in millions)
2016 60.60% 18% 78.60%
2017 64.84% 20.26% 85.10%
The per day average of internet users in Urban population is 62% and Rural population is 53%.
The rapid storm of fast technology has led to enormous growth of smartphone users in India. The May
2018 report by eMarketer, the US based market research firm reveals that 291.6 million smartphone users
were in India by 2017 and the number raised to 338 million in 2018 and it is forecasted to hit 490.9
million in 2020. The mobile data speed is also another reason for mobile users to choose mobile
shopping. Smart phones are easily affordable and the mobile data speed in India is 8.99Mbps which
encourages more number of customers to choose mcommerce.
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Future emerging trends of etail
TRANSFORM YOUR BUSINESS WITH TECHNOLOGY is the mantra of future retail.
Ecommerce trend is moving in lightening pace. Ecommerce is constantly updating with improved
technology and discovery. The following add on services are in line to meet the tech savvy customers:
Artificial Intelligence - is the science of programming machines or computers to reproduce
human processes like learning and decision making. AI uses natural language understanding and
machine learning technique specifically designed for online shopping. AI understands Product
category, Attributes, Sizes, Materials and other words used by buyers to express their needs and
preferences.
Chat bots - facebook, whatsapp, twitter and google allo are introducing integrated bots to help in
shopping, booking and customer service. Chatbot means chat robot which is AI enabled computer
programs that simulate human speech, can ask people questions and can respond to answers. In
2018, chatbots are being used to do tasks as straightforward as changing passwords and as
complicated as determining the mood of someone calling customer service. TAI Robotic –
Trading Artificial Intelligence in online stores is trying to replace the human touch in traditional
retail stores.
Virtual Reality is the future of Online retail. VR is the use of computer technology to create a
simulated environment. It aims at real – world replication, wherein brick and mortar experiences
can be translated into digital world. Artificial Intelligence plays a major role in making people
stay connected to digital world and purchasing online in future will become much more natural
and common. Voice commerce is used to buy the products. Retail with computer vision, facial
recognition, voice recognition and touch screen displays will facilitate online shopping in future.
Findings of the study
Sustainability in market by an offline retailer can be made successful only by redesigning the store
experiences of the customers, better staffing decisions, channelising marketing through mobile
apps, social media and adopting new technologies to can create impact in the minds of customers
Business expansion by offline retailers can be focused on rural areas of the country where e-
commerce facilities are yet to be developed
Online retailers who provide goods and services directly to customers create better brand
experiences for customers
Online retailers who replicate offline shopping experience like try ons, returns, offers and
discounts can serve customers satisfactorily by understanding and learning their likes and dislikes
Conclusion:
Retail is not dead only retail experiences are dying. Customers want friction free shopping which
saves time and money and eases their shopping experiences. Customers are interacting with retailers
across many different platforms, both physical and digital. People have become more tech savvy and
sophisticated due to Demonetisation and Digitalisation. Improvement in net banking facilities and
reduction in cash transactions have created wide opportunities for ecommerce sector in India. It is
also now far easier for online retailers to move into physical stores, and vice versa. An eCommerce
retailer, could open a pop-up shop or get involved with local markets. An offline retailer, can start selling
online through everything for little or no cost. As always, it is difficult to predict with high levels of
certainty what the future will look like for retailers. In the end, it can depend tremendously on the type of
retailer in question or on the ingenuity of human minds in coming up with new ideas and solutions. This
digital transformation will demand retailers, physical or digital, to adapt if they want to survive and
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prosper. However, perhaps the more pressing challenge for retailers is to evaluate how they can begin to
create an omni-channel strategy and meet the changing expectations of consumers. The ability to adapt, or
drive future change, will be the key to success of every retailer.
References :
1. Prof. Raymond R. Burke. October 2002.”Technology and the Customer Interface - What
consumers want in the physical and virtual store”. Journal of the Academy of Marketing Science.
Vol.30, Issue 4, pp:411-432.
2. Priyanka. P.V. and Dr. Padma Srinivasan. 2015. “How is Social Media Strategy used to generate
business in the retail industry in India”. International Journal of Marketing and Technology, Vol 5,
Issue 3, pp: 62-74.
3. Sakshi Gupta. 2014. “Online marketing some discrete points of discussion”. International Journal
of Marketing and Technology”. Vol.4, Issue 9, pp: 14-22
4. Dr. Michal Gregus and Marc Wiefel, Comenius University, Bratislava, 2015.”The impact of
traditional retail and the future model of multichannel”. International Journal of Scientific and
Research Publications. Vol.5, Issue.3
5. www.statista.com
6. Surabhi Agarwal, Feb 2018, Internet users in India expected to reach 500 million in June,
Economic Times Bureau, 06.15pm IST
https://economictimes.indiatimes.com/tech/internet/internet-users-in-india-expected-to-reach-500-
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