The twin worlds of offline and online retailers have had such a fiercely competitive relationship that it didn’t seem possible that –– to paraphrase Rudyard Kipling –– the twain would ever meet.

Increasingly, however, not only are the two meeting, they are even merging seamlessly, and re-engineering a symbiotic relationship.

More curiously, in recent times, offline retailers have been venturing into the online space, and have even begun snapping up e-commerce companies –– particularly if they find a value proposition.

Indicatively, the country’s largest offline retailer, Future Retail, snapped up FabFurnish; Mahindra Retail took over Babyoye; and, more recently, Titan decided to acquire a majority stake in Carat Lane, the biggest online jeweller.

The game plan

At one level, acquiring distressed e-commerce companies may appear to be an easy route for offline companies to establish an online presence in double-quick time. But, in fact, more far-sighted game plans may underlie such acquisitions.

For instance, Mahindra Retail bought out struggling kids portal Babyoye for its brand value. After the acquisition, Mahindra decided to change the name of its Mom&Me stores to Babyoye.

Interestingly, the company had been battling a legal case with another player that had named its stores MeNMoms. The rebranding of Mom&Me stores under the Babyoye brand has at one stroke solved its legal hassles.

A 22-carat acquisition

Likewise, Titan’s recent decision to acquire a majority stake in Chennai-based e-commerce company Caratlane was based on the realisation that it needed a specialised inventory-led model instead of a marketplace. The Tata Group is working on a larger marketplace –– Tata Unistore –– in which Titan could have sold its watch and jewellery products. But Titan opted for Caratlane.

“Titan realised that jewellery sales through marketplaces like Flipkart and Amazon have not been successful. We will also be able to grow our offline stores:as Caratlane will be an integral brand for Titan,” said Mithun Sacheti, Co-Founder & CEO, Caratlane.

The offline-to-online move was even more striking in the case of Kishore Biyani, Chairman, Future Group, given his well-known dislike of e-commerce companies. In his case, the decision to acquire the loss-making FabFurnish was about spinning off his furniture business into a listed entity to enhance shareholder value.

HomeTown, the furniture vertical under Future Retail, was struggling, much like FabFurnish. The plan, therefore, is to merge the two businesses, hive it off as a separate entity, and list it.

“We’re looking to create more value for our shareholders and have set a target ₹1,000 crore in the furniture business,’’ said Biyani.

FabFurnish will continue to remain an independent marketplace and will get business based on commissions, with HomeTown as one of its largest vendors.

That’s what a win-win proposition looks like.

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