Offline presence

Written by: Madhur

On Dec 18th, 2006

I’ve referred to this multiple times in the past. Off the top of my head, here and here. I think offline presence is very very important to build a large user base esp. if the service is targeted towards general masses (as opposed to say social networking site that is targeted towards teen and youth demographics) Every Internet usage report that comes out, we get to see the same thing coming out – Internet penetration is still limited to bigger cities, main mode of access is still not home – more than 50% of the Internet usage is seen from cyber cafes, offices, schools.

Today announced that they will be opening 600 property shops throughout India. I think this is a very good strategy. Real estate market is not limited to 10 million active Internet users in India. So in order to reach out to real critical mass, this should be a great move. If properly executed, their target audience will be orders of magnitude more than an Internet only shop. Of course we know that the Internet usage will only rise from this point, and the offline presence will help them in building a brand which will seamlessly transfer to the online world as well. I have talked about this with a few players in the industry about their ideas on adopting this strategy and the common issue is that this strategy is a little complicated to execute right in terms of logistics as well the fact this can be quite capital intensive. Agreed, but I think this is where we will see some real innovation in the Internet industry in India – how the logistics are handled to mix the online-offline service mode, how offline presence can be made in a cost effective way (collaboration with existing retailers or even cyber cafes, adopting the franchise model, etc.)

Some of the other players who are already doing this is with their Shaadi Point and BharatMatrimony with their offline centers. I’ve been informed that (DVD rentals) is planning something similar, although I haven’t seen them doing that just yet (they do have other means such as phone, SMS, though). If I have to take a guess, I think we might see some of the online ticketing sites adopting this strategy considering how competitive this space is getting and the fact that there are already so many offline travel shops/agents (hence opportunity for consolidation).

Sphere: Related Content

Entry Filed under: ecommerce,news

6 Responses

  1. 1. vivek garg said on December 18th, 2006 at 10:11 pm

    given the amount of funding available to self/angel startups, can everyone afford to have an offline presence ? Will it not drive the service price point higher?

    And with the Indian consumer space that can only afford cheap solutions, what is the tradeoff between subscriber acquisition cost vs. cost price of the solution?

  2. 2. Nishant said on December 19th, 2006 at 1:10 am

    Till India actually reaches the critical mass required to sustain the *ever growing* web phenomenon, it is, in my view, important for the *virtual* company to have some kind of *real* presence.

    I agree that it adds a lot of overhead and cost to have a offline presence. Maybe I am missing something, but why don’t these company form tie-ups with the already existing network? This would, again in my view, help both the parties. This would have multiple benefits:
    1. not deplete the already *scarce* funding
    2. In india, the average customer is still tied up to certain *circle* of distributers. Why not leverage it?
    3. At some point of time, the offline company would start getting the value of online presence. Having synergy with them from start would profit you long term

  3. 3. IndianPad said on December 19th, 2006 at 4:12 am

    Indian Internet companies – offline presence matters…

    Indian Internet companies – offline presence matters posted at…

  4. 4. iLeher » 10 predictions for year 2007 - All about Internet industry in India said on December 31st, 2006 at 4:17 am

    […] 9. Seventymm, madhouse and other DVD rental companies will realize the importance of offline presence and some of them will tie up with local rental stores (I don’t know of any existing rental chain?) for offerings like in-store exchange program. Travel portals will start building offline presence similar to Shaadi Point and BharatMatrimony center. We pondered about it earlier at “Cybercafes as a tickets distribution channel“. […]

  5. 5. iLeher » Online DVD Rental: Behind the curtains with Madhouse- All about Internet industry in India said on January 9th, 2007 at 11:44 pm

    […] Moat and Barrier to entry: What are the differentiating factors for a DVD rental business? What would prevent your competitor from stealing your customers? -I think exclusive licensing or innovative licensing methods with the publishers and production houses are certainly one of them. Madhouse licensing structure with various publishers includes flat payment per title for unlimited rental for the entire year. They also mention free licensing if they buy the DVD. To reduce this cost they are also thinking about revenue sharing deals. Primary goal here is to reduce capital cost with increased availability of titles. -Low cost and a large scale distribution network. This can become a true moat once companies go national. Madhouse is trying to build their own. -Technology for online recommendation and title queuing algorithm. Getting this system right is very important. Madhouse has tied up with NetKode, the company that manages technology for, biggest DVD retailer in Singapore. -Offline presence: madhouse is trying to position itself as movie rental service in their users mind instead of web company. This is why they put emphasis on interacting one to one with their customers. They will also try to achieve this by increasing their offline presence. I would like to remind our readers that one of our predictions for 2007 was that DVD rental companies will come up with offline presence and Madhouse is the first company that is doing this. They have introduced a concept of Movie point. These are existing retail stores that will agree to become DVD return outlets. Slowly they can expand these channels as pickup points. This will create indirect channels at reduced or fixed SAC targeting customers who are not going online. This is important as reverse logistic (returning DVDs) makes a big chunk of operating cost for Madhouse. […]

  6. 6. iLeher » How to indianize your ecommerce site?- All about Internet industry in India said on January 12th, 2007 at 8:51 am

    […] Offline presence We have written about this in details here. Having offline presence just gives a feeling that its all “real”. This can be a very important psychological factor for many users. […]

Comments are closed.