Does Your Online Store Need a Physical Storefront?

When you have an online store and business is booming, the natural question that arises is whether or not a physical storefront is a worthwhile endeavor to undertake. While we certainly live in an day wherein ecommerce is a booming business, we’ve also seen that the brick-and-mortar store can be a powerful game-changer for organizations.

So, for the small business owner the question isn’t simple; if the likes of Amazon isn’t writing off the value of physical storefronts, then neither can you. However, physical stores bring with them a new world of expense and risk. Thus, the decision needs to be carefully considered in the interest of bolstering business, and not bogging it down with an addition that is costly and unnecessary.


The Challenges of Physical Storefronts 

If you’re a small business owner and your ecommerce store has taken off, you may tempted to believe that a physical storefront is simply a natural extension of the business you have online. However, the reality is that they’re a completely different animal.

They Add Expenses 

One of the best things about online platforms for retailers is the low operating cost. When you sell an item in store, you have to account not just for the cost of production but also for the cost of operating the space you’re selling the product in.


Some of the additional costs ecommerce sellers may not have experience with include:


The cost of your space: When you find potential locations to open your store the inevitable choice, you’ll have to make is whether to buy or lease a location.


According to real estate experts, typically, “Buying commercial real estate is a better option if you plan to stay in the same location for seven or more years. If you plan to stay in a single location for less than seven years, then leasing might be a better option.”


When you buy, you benefit from equity earned, renting potential, and property control. However, the brunt of the cost of upkeep and security fall on you.


The cost of insuring your space: While the majority of small businesses will benefit from certain kinds of business insurance, physical storefronts require even more protection.


“Insurance is one of the most important needs for a small business, yet it’s one that many owners skimp on… owners tend to forgo it or not get enough, even though that can put their companies and their livelihoods at risk. Another problem is that business owners don’t re-evaluate their insurance needs as their companies grow — it’s easier to just pay the premium and get that item off their to-do list,” writes NBC News.


Without the appropriate type of small business insurance, a company could find itself responsible for damage or liability expenses it will never be able to pay off or recover from.


Ecommerce business owners certainly understand that these issues exist in general, but the requirements are so nuanced they require a significant amount of consideration.

They’re Difficult to Do Right 

We know that small businesses are prone to failure, and today even retail giants are closing in increasing rates. Businesses close when they fail to meet customer’s needs, and the challenge for those moving from ecommerce to brick-and-mortar is to successfully continue to meet needs in a totally new context.


Opening a physical storefront in the digital age is challenging, because they require retailers to think innovatively and creatively about a platform that has been around for a long time.


You need the right location: When you’re online, you can market to diverse audiences, and you can market to a really specific audience, or you can do both. Then, via the magic of the internet, you can grow a customer base that doesn’t share an geographic relation to you.


If you’re going to transition to a physical space, you need one that exists in an area where you know you’ll be able to connect with your target audience.


You have to have the right approach: It is unlikely you’ll be able to simply display products and move on. The ecommerce retailers that are successfully capitalizing on brick-and-mortar locations are those who approach it in novel ways.


For example, eyeglass company Warby Parker has gotten a lot of attention for the fact that their customer experience is so focused on the customer and not on the merchandise. Everything from the behaviour of their sales associates to the layout of their store communicates again and again that the bottom line comes after prioritizing their customers.


If your company is going to do brick-and-mortar right, it will have to figure out how to channel the Warby Parker difference, in a way that is relevant and distinct to your company.


The Potential of Physical Storefronts 

Despite the many obstacles facing ecommerce businesses who intend to venture into the physical domain, the reality remains that brick-and-mortar stores not a only bring a new means of challenge, but also of value and reward.


Steve Dennis writes for Forbes, “Physical Retail isn’t dead. Boring retail is.” A cursory glance at the world of brick-and-mortar demonstrates that Dennis has a point. While the likes of Sears and Macy’s are disappearing, others like Amazon, Apple, and TJ Maxx are enjoying growth and profit in their physical storefronts.


There is a clear opportunity for ecommerce retailers to tap into this reality in the interest of bolstering their success.


The Connection 

Over half of customers prefer physical stores to online ones. Why? It’s certainly not for the sake of convenience or — in age where free shipping abounds — cost. Instead, what physical stores offer that online ways never will is connection.


We live in an age where lifestyle marketing reigns; people want to interact with brands whose priorities align with their own. When you consider this in light of the challenges facing brick-and-mortar stores a checklist forms:


  • Can you financially afford the space and what it requires to operate that space?
  • Can you find a space in a location where your target audience has access?
  • Can you present your product in an innovative format?
  • Can you maintain your brand image and connect with the people who enter your store?


If you’re confident in your ability to make those things happen consistently, over the long term a physical storefront may be a smart move for your company. It will allow you to reach people and foster a sense of connection and loyalty with them you would be hard pressed to achieve only via the internet.


In their overview of entrepreneurial risk, Western Governors University writes, “In addition to being willing to take risks, the personality of entrepreneurs and risk-takers is crucial to the outcome of risk-taking. New studies indicate that optimism or positive feelings about luck and ability help risk-takers succeed. The more lucky a risk-taker believes they are, or the more they have optimism and confidence in their skills and abilities, the more likely they are to overcome the challenges associated with the risk they are taking.”


Thus, this isn’t just about sorting out whether or not you can logistically make it happen. It’s also a matter of deciding whether or not you are ready and interested in embracing the risks. If you consider opening a physical store and those thoughts are marked by optimism then you’re already in the right mental space.


Ultimately, the decision to expand from ecommerce to physical storefronts is made when business owners consider both the logical, as well as the experiential — both theirs and the customers. The math needs to check out so that the company is able to raise their profit margin, and not suffer adverse consequences.


Additionally, there’s the intangible components of opening a store space that need to be considered. The risks will always be there, the question is whether or not you’re in a position to deal with them gracefully. Similarly, if the customers are there, can you provide the experience that will keep them coming back?

While it’s not a dilemma with a clear cut resolution, one thing is certain: there is still a place in modern culture for the brick-and-mortar store.


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