ONLINE

VS
OFFLINE
(COST COMPARISONS)
BY:- TANISHQ KANSAL(18385)
TANYA BATRA(18386)
INTRODUCTION
 ONLINE BUSINESS – Selling something on the internet with the help of
global communication infrastructure of the internet. Or in simple
words it refers to buying and selling good on internet.

 OFFLINE BUSINESS – It is commenced at a physical place where

people come, see and browse through to buy goods. It is the
traditional form of business which is also called brick and mortar
business sometimes.
DOMINATION
 The market is still dominated by the offline stores but online stores are
on a rise and have capability of overtaking offline stores in future.
 Generic products have more depends on online platforms.
 It’s not always about price. As online business is there for you 24
hours a day. That makes it much more convenient than traditional
businesses.
 But appearance matters. As people can see, feel and sometimes
even try the product before buying. But in case of an online business
you may not be able to replace your product.
CURRENT SCENARIO:INDIA

The market is still dominated by the offline

stores but online stores are on a rise and
have capability of overtaking offline
stores in future.
CURRENT SCENARIO: USA
Online Business Swallowing offline
Business
What Do We Buy?
SYNERGY OR SUBSITUTION?

 As a retail channel, physical stores exhibit many advantages over

online stores. It is well documented that physical stores provide
instant gratification,
 However, online stores can help reach markets that were previously
unreachable
 the marketing communication impact of the offline store identified
in areas without a brand presence is more likely to be information
about the existence of the brand in general rather than information
about product attributes.
 The role of physical stores in enhancing brand image is well-
established in the ethnographic marketing literature and in the
popular press.
 Kozinets et al. (2002, p. 17) discuss the role of flagship retail stores
that are “operated with the intention of building or reinforcing the
impact of the brand rather than operating to sell product at a
profit.”
 Similarly, when Microsoft stores started opening, the press often
emphasized that the stores were showrooms (e.g., Manjoo 2012). In
this study, the authors argue that
 Walter Isaacson (2011), in his biography of Steve Jobs, emphasizes
the brand-building role of the Apple Stores.
 local offline stores help create brand awareness and, consequently,
help acquire new customers from the area. The newly acquired
customers then buy more both online and offline.
Advantages of Buying Online
Advantages of Buying Offline
Cost Comparisons
Running an offline Business
Monthly retail lease - In major cities, a storefront location will cost between
$50-75 per square foot a year. The average retail shop is around 1,000
square feet including area for storage, so leasing costs will be around
$4166 in per month. There is usually a minimum lease period of 6 months
and sometimes a year.
Up front investment - You will also have to renovate the retail space to suit
your business: create a sign, buy shop fittings and equipment. This can cost
tens of thousands of dollars. Let’s go with a moderate figure of $10,000 for
renovation, sign creation, lease closing costs and equipment costs.
Staff – You’ll need at least two staff members to cover retail hours of 9:00
am – 7:00 pm, seven days per week. Minimum wage is $10.25/hour. Let’s
say you pay $12/hour. This adds up to $240/day, $1680 per week and
$6720 per month.
TOTAL COST - $10,000 initial investment and then $10,886 in monthly costs.
Running an Online business
 Web development costs: A custom e-commerce website costs
around $6,000. This includes complete shopping cart functionality,
blog, social media integration, reviews and ratings features, and full
analytics tracking to track visitors and sales.
 Web hosting costs: We would hire a reliable company to host on
high-speed servers. This will cost around $30/month.
 No sales staff costs: However, instead of paying $6,720 per month to
sales staff and hoping traffic will walk in the door, you can invest
some of that money in highly-targeted pay-per-click (PPC)
advertising to drive online traffic to your website. Let’s say you’re
willing to spend $500/month on PPC.
 Technical and marketing support: You will need technical assistance
for your website because you’ll be making changes to features,
content, and images as you tweak the website for better results. You
should also hire someone who can run online marketing for you.
Budget $2,500 per month for technical and marketing support. If you
don’t want to deal with orders and shipping, you can spend some
of this budget on an order fulfillment service at a fraction of what it
would cost to pay sales staff working in 10 hours a day in a store.
They will charge per order fulfilled and some minimum monthly
amount.
Total Cost: $6,000 initial investment and $2,530 per month in costs; if you
are not doing your own shipping and handling, add in whatever a
service charges to handle order fulfillment.
BILLBOARD EFFECT

the opening of a new offline

store leads to an increase in the
number of first-time customers

Drives increase in offline sales

drive the increase in online sales

BILLOARD EFFECT

 the opening of a new offline store leads to an increase in the number of first-time customers from
the surrounding areas. This suggests that the offline store provides information about the retailer.

 They demonstrate that these new customers drive the increase in online sales in an area after the
store opening, and this increase persists for several months. At the same time, the online sales from
existing customers acquired before a local store opening do not appear to change after the
store opens. This is true regardless of whether the customer resides in an area with a prior brand
presence or not. Again, this suggests that the store provides information to these new customers.

 They explore whether the complementarity is generated through the provision of information
about the fit and feel of the products. There is no qualitative difference between apparel and
other products. In this way, there is no evidence to support the idea that offline stores provide this
important type of product attribute information.

 Although online product returns do fall after a store opens, the authors find no difference
between places with a brand presence and places without such a presence, again suggesting
that product attribute information does not drive the results.
SUBSTITUTION

the growth of online will put more

and more pressure on offline prices

to increased (price) competition

and increased price transparency

drop in store productivity

small stores out of business and

provide larger chains with a large
set of ‘zombie stores’ with low traffic
and low (or negative) profitability.
Lead Generation
Offline Customer: In this, the customer typically visits a showroom,
browses the company’s inventory and then decides to visit a
competing store for comparison .The salesmen present there
convinces the customer to buy product and then he takes the final
decision.
Online Customer: Here the customer visits a company’s website and
browses through various products. Compares quality and price of the
product himself then takes the final decision
Lead Cost
 Offline leads are very costly as heavy advertisements and human
skills are required to generate them.
They are estimated to cost around $300-$500.
 Online Leads are much cheaper, they are made by advertising
online.
They are estimated to cost around $25-$30.
 Although offlline leads might be expensive but they have a very
high conversion rate of 40%.
 Online stores on the other hand have very low conversion rate as
they does not involve interaction with the potential lead. So it’s
conversion rate is only 18%.
Showrooming: declining offline
sales
 A new emerging way of shopping has already been named
“showrooming”: customers check out products in the store and
order them online.
THE FUTURE
E – COMMERCE AND E-CONOMY

 The e-commerce boom has led the way for job opportunities in the
marketing and the e-commerce industry, in general.
 The working class already established in the IT and other consumer
goods sectors are expected to get 35-50% pay raise this year.
 The e-commerce industry in India is expected to contribute to, at
least, 4% of the total GDP of India by 2020;
 such growth will have a positive impact on other related industries
such as logistics, whose revenue is expected to churn nearly $2.5
billion by 2020.
E – COMMERCE AND E-CONOMY
THE REAL PICTURE
THE SOLUTIONS

 Historically, the retail industry has not focused on retraining workers.

However, many large retailers are increasing their commitment to
their workforce. In January 2017, the National Retail Federation
gathered 21 retailers and nonprofit organizations to launch RISE Up
(Retail Industry Skills & Education), a training and credentialing
initiative designed to help entry-level workers achieve their broad
professional goals.
 Individual companies are also engaging in significant training
efforts. For example, last year Walmart created the Walmart
Academies, which provide both classroom learning and sales floor
exercises to help retail workers develop the skills needed for their
current, customer-facing positions, as well as those necessary for
success in future professional endeavors.
Conclusion
At last, we would say that both online and offline businesses might
have their own advantages. But with the growing technology online
stores will surely be in lead in future.
Since People have started given preference to their comfort. Which
they receive while purchasing online only.
Also, an online business is pretty cheap to set up as compared to it’s
traditional form.
So it will surely be difficult for offline businesses to survive in the future
against the online businesses.