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Click-and-mortar key to 
e-retailers’ growth strategy

SINGAPORE — When Zalora opened its first store at ION Orchard in October 2014, the online fashion retailer noticed that four out of five customers purchasing at the pop-up store were first-time buyers.

The Zalora pop-up store at Bugis+ on 15 April 2015. Photo: Ooi Boon Keong

The Zalora pop-up store at Bugis+ on 15 April 2015. Photo: Ooi Boon Keong

SINGAPORE — When Zalora opened its first store at ION Orchard in October 2014, the online fashion retailer noticed that four out of five customers purchasing at the pop-up store were first-time buyers.

The offline strategy, aimed at building trust and confidence among consumers with a physical presence through a brick-and-mortar store, was effective in converting shoppers into loyal repeat customers online.

The second store at Bugis+ quickly followed, with the third at One Raffles Place and more in other markets including Hong Kong, Malaysia, Indonesia and the Philippines.

Today, Zalora’s click-and-mortar stores generate word-of-mouth marketing among shoppers and also function as creative spaces for various marketing projects including as a multi-purpose space for product shots, event space, influencer filming and collaboration with other brand partners.

Click-and-mortar stores, where customers shop over the Internet on electronic retailers’ websites and are also able to physically visit the retailer’s physical store, provide customers with the efficiency of online transactions, as well as the face-to-face interaction of retail stores. For Zalora, the clicks-and-mortar concept is now one of its key brand-building strategies while converting traditional consumers into e-consumers.

“In the next five to 10 years, the most successful retailers will not be either online or offline but the ones who makes the best out of both worlds,” Zalora’s chief marketing officer 
Mr Tito Costa told TODAY.

“Despite the fast growth of e-commerce in the past few years, customers are still not confident when it comes to shopping fashion online. The barrier of trust has always been a big challenge for online retailers to overcome, as customers seek to touch and feel the products before they purchase for the first time,” said Mr Costa.

Having a physical presence enables Zalora to engage its customers through multiple channels, including social media, mobile applications and telephone communications. This helps the company engage with its customers in a “deeper and more meaningful way”, he added. One of the key trends that Zalora has observed is the dramatic shift towards mobile or app shopping.

Zalora’s growth in Asia reflects the global trend where big international online retailers such as Alibaba and Amazon have also established an offline, brick-and-mortar presence, despite their primary online business.

In January this year, the Financial Times reported that Alibaba would be investing US$2.6 billion (S$3.6 billion) to take Chinese department store Intime private. China-based Alibaba is not the only e-commerce name turning to brick and mortar.

Last year, online retail giant Amazon announced that it would be launching physical stores, where customers can pick up groceries and walk out without having to queue and pay. Customers have to download an app that tracks their purchases and bills their Amazon accounts directly. The Amazon Go stores are set to make their debut in the American retailer’s home-base in Seattle, Washington, early this year.

“Today we cannot just separate online and offline,” Alibaba Group chief executive, Mr Daniel Zhang, told business leaders at the World Economic Forum annual meeting in Davos, Switzerland, earlier this year. He noted that even as people “love to go to the mall for the experience”, they are on their phones, hence, online and offline simultaneously.

In Singapore, online players including Reebonz, Megafash, HipVan and Love, Bonito have been quietly expanding their offline footprint across local malls. Home-grown Megafash, which specialises in Singapore brands, for instance, has expanded its physical stores to include outlets in Suntec City, Marina Square, Westgate, Tanjong Pagar Centre and Jem.

Earlier this year, local furniture retailer HipVan opened its 11,000sqft flagship store at The Cathay. HipVan co-founder Danny Tan said that it was important for the company to cater to its customers, mainly in the 30- to-50-year age group, “who are not entirely comfortable yet with making their purchases online”.

“There are definitely costs involved in having a physical store. but to be clear, HipVan is still focused on being an online store and our physical presence is used only as a marketing initiative to reach out to more consumers. So in that sense, the cost structure and how we go about building our store is fundamentally different from traditional brick-and-mortar retailers,” said Mr Tan.

Having a physical store enables consumers to touch, feel and see the company’s products, particularly its high-end merchandise, which allows would-be buyers to gauge the quality and authenticity of the products, says Mr Tan. At the same time, online retailers get to connect directly with their customers who walk into their stores, and better understand their needs.

For online players looking to establish their brand, the physical store presence is useful, as retailers are able to display their capabilities and product range in more creative ways, said Mr Pushpendra Sharma, founder of SpacesGenie.com, a Singapore-based online platform for the listing and booking of mainly short-term retail spaces.

Pop-up stores can help companies test the market and get closer to their customers, offering flexibility at a cost-effective rate. “It is a good time for online retailers to acquire an offline presence, given that rentals are low and landlords are open to discussing innovative ways to let out their space as they try to boost footfall at their malls,” he said.

“These online stores pull a lot of the young, Internet-savvy crowd to the shopping malls, who drop in to get a feel of the products from online retailers.

“Especially for those retailers selling seasonal goods, it is better to have their products out at stores instead of in warehouses,” he said.

Looking ahead, Mr Sharma says the future of retail will be driven by artificial intelligence and robotics, as retailers seek to differentiate themselves by creating new shopping experiences to strengthen their brand and attract customers.

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