Online vs physical – what to think about when opening a store

There can be a lot to take on board when stepping out into the world of retail, and sometimes the biggest decision in today's technological era is whether to open a physical bricks-and-mortar store, or a digital-only shop.According to the London Stock Exchange's '1000 Companies to Inspire Britain 2015' report: "Shifts in consumer behaviour are disrupting the retail landscape and giving rise to new digital platforms and technologies that augment the shopping experience."

 

Internet sales just keep on growing, with the latest British Retail Consortium (BRC) KPMG Online Retail Sales Monitor identifying that February's online sales represented 17.5 per cent of all non-food sales. This was an increase from the 16.6 per cent recorded the same time last year.

What benefits can an online store offer?

For shoppers there are numerous benefits offered by an online store over its physical alternative. Customers can easily search for exactly what they want using search engines - or even within the store - taking them directly to each item they're seeking.

These same functions make it easy for customers to make price comparisons and read reviews. On top of this there are also never any queues and one doesn't has to traipse out in the rain or snow to purchase Mum's birthday present, or battle with the notoriously intense Christmas crowds.

Having an online store allows your customers flexibility, with the ability to shop at any time of day or night. Even the smallest store can reach a world-wide audience; with a digital store you aren't restricted to shoppers in a geographical location, meaning even niche products can be successful with a global audience.

For SMEs, websites can be a wonderful way to carry a bigger inventory than would be possible with a high street store; particularly when presentation is less important in a warehouse setting. In addition, overheads are reduced without the need for expensive high street premises, in fact some of the most successful online retailers started in spare bedrooms and living rooms.

The tech consideration

Automation can take much of the work out of online selling and the benefits of technology even opens up the option of selling digital products to support physical sales. With online payment through gateways, retailers can take any currency with automatic conversion. The convenience cannot be denied.

Ecommerce levels the playing field; even microbusinesses can hold their own online, and online marketplaces such as eBay and Etsy make online selling simple, meaning little or no ecommerce experience is needed to get going.

Data collection is far easier for online retailers; adding a customer to a mailing list can be as simple as a tick box, and with customer accounts it's simple to build up profiles to help you do more targeted marketing. With cookies and other clever tracking ecommerce tricks, data collection can really help you understand customer behaviour.

Benefits of physical stores

There is still much evidence that bricks and mortar stores continue to have a place in the economy, and there are many obvious benefits that these establishments hold over online stores; the most obvious being the customer can touch the product and see exactly what they are buying.

With no screen resolution causing potential differences in colours or size, life can be much simpler. When it comes to clothing, customers can try items on then and there to get the best fit, and walk away with a new outfit that day. This instant gratification is also another positive.

No postage costs can of course be weighed up with car parking and public transport costs, but often a shopping trip for many can be turned into a social outing.

The human contact that is necessary for physical stores is an integral part of the sales funnel; this human interaction creates a bond between the seller and consumer, instilling trust. Online retailers must work hard to replicate this experience for a user of their website.

Kevin Firth is the marketing director at Stitchncraft Beads. An online retailer of bead and craft supplies, the company also has a physical store located just outside Shaftesbury in Dorset.

Discussing the positives of the physical shop he says: "The [physical] retail environment offers customers the opportunity to see a whole range of goods that aren't immediately presented by a website, in which the user needs to navigate their way around to find items that might not be initially obvious. The personal interaction with staff in a retail premises ensures that a customer has expert knowledge on hand which can also aid with their creative side in developing ideas throughout their stay."

The online side of the business is also important for Stitchncraft Beads, and Mr Firth is quick to balance the argument. "For the busy individual, the online store is a great resource to utilise when time is in short supply or price comparison is needed when making a purchase," he noted. "Also the immediacy of being able to source products can offer a means to purchase a large range of goods from various outlets all in one sitting which doesn't require lengthy and potentially costly travel."

Stitchncraft Beads sees a comfortable 50/50 split between online and in-store sales, Mr Firth concludes: "In most cases I think the discerning shopper will utilise both buying opportunities to ensure they can take full advantage of the benefits of both retail and online purchasing."

Combining the two

Some retailers like Stitchncraft have been discovering the benefits of a physical store working hand-in-hand with an online mail order business. For e-retailers, launching a bricks and mortar store can add legitimacy to an online brand; the concept of 'bricks and clicks' is one that is gaining credibility.

This concept follows on naturally from the rise of so-called 'showrooming', where customers use physical stores to see products 'in the flesh' before going home to price match and purchase online. According to research in America by AT Kearney, 90 per cent of all retail purchases are still done in physical stores, and a total of 95 per cent of the purchases are related to a physical store. For example, a purchase may be ordered online, but prior to that 'tested' in a physical store. 

It seems that in this day and age, having a physical store can be a great thing, but not without the support of an online presence. For SMEs with a smaller funding pot, though, an online store truly is the best place to start out.

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