E-Commerce Businesses: Should You Open a Brick-and-Mortar Store?

6 mins read

When e-commerce started booming and companies like Amazon became consumers’ first stops when looking to purchase something, many people were afraid of an impending “retail apocalypse.” How could physical stores compete with the convenience of ordering a product online and having it arrive at the purchaser’s doorstep within a matter of days? Why would anyone shop for products in person when they can do it from their couches?

Thousands of stores closed and declared bankruptcy. However, brick-and-mortar retail is not dying—or anywhere close. E-commerce lead researcher at Kantar Retail, Reid Greenberg, says:

“It isn’t that retail is dead. Roughly 85-90 percent of all retail takes place in brick-and-mortar locations. But bad brick-and-mortar is. These mall-type department stores are faced with many challenges because they aren’t connecting with shoppers in the way they want. Consumers already know what to expect when walking into one of these stores.”

Major retailers are not modernizing their business models. Consumers enjoy the convenience of ordering online, true, but the numbers reveal that in-person shopping still occupies an enormous place in culture and the economy. Small businesses that do both are surviving, selling their products in physical stores and online.

But now the reverse is happening: e-commerce businesses are going storefront. Companies such as Allbirds, ModCloth, Glossier, and Madison Reed have opened brick-and-mortar locations. Why are they doing so? And should you, as an e-commerce business owner, do the same?

Why it’s worthwhile

Doubling as an e-commerce and physical store (or chain) is good for business. While ordering online is convenient, customers still enjoy being able to see and touch a product before buying it, gauging a sense of how it will fit into their lives. While PwC projects an increase of 25 percent in mobile shopping and a decrease in brick-and-mortar sales from $3.4 trillion to $3 trillion, the latter number agrees with Mr. Greenberg’s figure of 90 percent.

Macy’s and Walmart, two of the giant retailers known to be closing stores, conducted a successful experiment in 2015 that combined digital sales and in-person shopping. Customers could use a “click and collect” feature that allowed them to place an order online and pick it up themselves in-store. 69 percent of shoppers who took advantage of this option also purchased other items while picking up their orders.

Physical stores are useful for connecting with customers on a deeper level. It is imperative to sell to customers how they desire in the present rather than predicting what their future behaviors will be. According to the founder and CEO of Pixlee, Kyle Wong:

“As they mature, digital vertically integrated brands more often than not extend offline—either through experiential physical retail or through exclusive partnerships. However, these physical locations are deeply integrated with the overarching brand experience, and their openings are heavily marketed with influencers, events, strategic content, and promotions.”

Consumers crave experiences, which means purchasing from you should not be an isolated interaction. People enjoy being able to sift through racks of clothing, imagine how furniture would look in their homes, engage with real people at checkout, and get expert advice or guidance from sales assistants. Google also prioritizes businesses with physical locations, so your SEO efforts will gain a boost.

How should you do it?

If you decide going offline is the right move for your business, then naturally you are wondering what your plan should look like. You may even have a recognizable brand, which means you are in a better position than someone starting from scratch. The first step is deciding where to open your space. Assess where your largest customer base comes from geographically, or research areas where your market is particularly popular (this way, folks will be happy to see your store pop up, and they will be confident in purchasing from you once they learn you have been in business for a while).

Remember to ask yourself the following questions: how much space do you need? Will you need to hire an interior designer? How much can you afford in rent? What kind of payment system will you use? Managing a brick-and-mortar location is often more expensive than running an online-only business. If your expertise lies in the digital realm, you also need to be prepared to deal with a variety of factors you may not be accustomed to navigating, such as landlords, rent, utilities, staff, different marketing approaches, signage, and more. Make sure you compose a thorough business plan and have other business owners look it over.

Going from online to offline is a significant step, but it may be just what your business needs. If you are an e-commerce business owner, do you plan to open a brick-and-mortar store?