Hybrid Model: The Answer to Optimal Retailing?

Hybrid Model: The Answer to Optimal Retailing?

It looks like the hybrid retail model is here to stay and not just a passing phase.

We are talking about the retail industry in India, which has realized the significance of two-dimensional retailing and gradually shifting focus to mixed or hybrid retailing.

All this is because retail businesses have to keep up with the hyper-competitive and ever-changing retail landscape, where digital and physical retailing are truly becoming one.

The recent trends show that hybrid model, also known as the “Marketplace Model,” is disrupting the conventional brick-and-mortar and online retailing as stand-alone businesses.

Even the big players of the Indian e-retail market Snapdeal and Flipkart have initiated to set up their offline stores in different cities. The purpose is to gain credibility and a huge consumer base.

This hybrid retail model may prove to be efficient in India because of increasing point-of-purchases and consumers getting the experience of both online and physical purchases. However, despite huge growth potential, there can be various gray areas that need fixing. Some of these areas include packaging, timeliness, logistics, quick reversals and others. Here, we would try to provide some of the key insights into hybrid retailing, including its advantages.

Hybrid Retailing Can be Diverse

It is a fact that the FMCG sector has immense potential to grow in the future and reshape the retail landscape. Particularly, online grocery stores along with the Kirana stores are likely to add up to 90 percent of FMCG sales shortly. Taking the cue from the FMCG industry, now other retail businesses are also gradually moving towards the hybrid mode. For example, furniture and home products e-commerce businesses like Pepperfry are setting up their offline retail stores at various shopping malls of late.

In the current digital environment, consumers have choices than ever before. They can browse online retail inventories while on-the-go using their smartphones or tablets. In this context, choosing a product online and checking it out at the physical store can give the much-needed reassurance to consumers about a brand’s credibility. That’s why the omnichannel approach is the future of retailing.

Key Advantages of Hybrid Mode

Reduced Marketing Budget, increased sales

As the online retail market has become highly competitive, eTailers need to spend on various forms of advertisements and organize events to draw attention. These will add to the recurring costs.

Opening a physical store, on the other hand, has a monthly maintenance cost too. However, the market budget may dip substantially due to saving various advertisement costs. For example, Firstcry, the online shopping store for children and baby products, stated that opening stores have helped them cut down on the marketing budget by 25 percent.

Combining both online and offline store inventories can provide the optimum balance to a retail business.

Touch and Feel When Buying Products by Consumers

Etailers have realized that to fully explore the untapped e-commerce market, providing the “touch and feel” shopping experience to consumers is quite important.

Keeping this in mind leading online retailers are opening offline stores. Even big brands like Tata are embracing omnichannel approach. In this way, lines between online and offline retailing have blurred.

Enables Better Capacity Planning

Managing inventory properly is an ongoing challenging task. Customers these days demand a wide range of products to choose from. Disliking products result in large volumes of returns — particularly from customers who purchased something online but want to return to the store. Sometimes even the most advanced planning and forecasting tools are unable to balance inventory. In this scenario, retailers need to carefully build, buy or acquire new distribution centres to meet customers’ demand. Retailers should also assess the overall labour impacts and analyze their historical sales data to create the right capacity.


When incorporating the hybrid retail model, consider customer’s convenience related to store layout, e-Commerce and product availability. Subsequently, demand planning techniques that will enable you to make all the viable changes to your physical facilities, inventories and workforce management.

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