Transition from Instore selling to Online Selling – How is it going to Impact the Sportswear industry?
The transition from offline to online is not optional there are many paths to it, writes Rajiv Mehta and Prashant Desai, Founders D:FY.
The sports gear industry in India is at an inflection. As India mirrors China’s per capita growth from USD 1800 to around USD 7000 in the next 15 years, one industry that will transform in sports gear industry.
Here is why:
- One, people will eat more. In China this resulted in bigger pot bellies for both sexes.
- Two, this will lead to more lifestyle diseases.
- Three, as a result, people will exercise more, or let’s put it, want to be seen exercising more.
Nothing demonstrates that you íntend’ to be fitter than sports gear!
In China, the brands that service the mid-premium market (RS 3000+) grew to 50,000 stores in under 15 years! And similar has been the growth trajectory online.
As we see it, there is no option for sports gear brands to be present online. The transition though will be challenging.
Here are a few questions we asked ourselves for our brand D:FY:
Why do you want to be online? The core purpose? Is it volume or presence or brand? It’s all for everyone, but in terms of batting order, which comes first?
If its volume, discount will be a way of life. The German sports retailer today struggles to make money due to aggressive volume push ultimately having an adverse impact of off line volumes (full price). And it becomes such a vicious cycle, that’s its tough to come out. Not to mention, the erosion of the brand in the long term. Would you pay Rs 8000 for the sports brand shoes when you can have the same brand at Rs 4000 (not necessary the same product) online?
Do you go exclusively with an online layer or chose marketplace on every platform as a strategy?
Again, volume, presence and brand strategy question. Depending on what you chose as you transition, your longer term value will get created or destroyed. We at D:FY chose online exclusive with one player. Our thinking was to build the online presence first, brand next and last came volumes. It helped us put a firmer footing for our instore presence which is 20 locations. But its entirely upto you and your priority. There is no right move. It’s your move.
However, we feel that to make that move, the understanding has to be correct. Either live with the fact that you will have lower online volumes than competition but brand will be protected and volumes will come eventually. Or go aggressive and build high volumes at the cost of brand and that brand will get built eventually. Ditto for cash flow and value creation.
The transition to online is not optional. There are many paths. As we have learnt, there is no right path, there is your way and your way only.
Just be wise. We chose brand over volumes and went exclusive with Amazon.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
Around The World