Fabmart goes offline

Prashant L Rao/Bangalore

Sudhakar says the aim is to make physical stores account for 50 percent of its business by 2003

In a surprise move, online retailer Fabmart has announced its decision to set up a nationwide chain of stores that will be located within larger super stores. “We will set up seven to ten stores by year-end,” says V S Sudhakar, managing director, Fabmart. The stores will come up in the metros and Bangalore with an investment of Rs 10-15 lakhs towards inventory from the company. A franchising model will be used. The first store has already commenced operations as a store-within-a-store at Big Bazaar, Bangalore.

While Fabmart’s revenues, hitherto purely online, have been growing at a healthy rate from Rs 3.2 crore in 2000-01 to a projected Rs 10 crore this fiscal, their breakeven target for March 2003 is Rs 35-40 crore. This looks unlikely to materialise with a pure online model given the present IT slump. That’s where the move to offline makes sense as a way to augment the e-tailers revenues and give it a physical face to the customer.

Fabmart’s offline foray will be dominated by the offline equivalent of its most successful online store the grocery store. The company took a different track with this offering by setting up its own warehousing and delivery mechanism from February 2001 onwards. With that in place and business booming it is all set to tackle the real world.

Can Fabmart pull it off? It’s hard to say. Sudhakar is confident that Fabmart’s expertise in using IT in retail will help it win this war. For instance, the company has used IT to tailor its inventory for the sales surge at the end of each month when monthly purchases are made. Currently, Fabmart’s inventories stand at less than fourteen days of stock. However, it is hard to discount the fact that Fabmart will be competing on fresh turf here against the likes of Foodworld and Shopper’s Stop who are no slouches in technology.

At present, the e-tailer makes 15 percent on grocery sales and offers a 3 percent discount across the store. Interestingly its phone ordering facility has failed to take off with only 20 percent of orders in Bangalore (where the grocery online store made its debut) being placed over the phone with the majority still being pure Web-based sales.

Fabmart says that it will use the grocery offering to spearhead its offline foray with other products being available through in-store kiosks. The aim? To get 50 percent of sales from physical stores by March 2003 and make that Rs 40 crore.