From the blog Pros and Cons of Selling Through Online Channels Versus A Physical Store
Amid the hype about a “retail apocalypse” — the seemingly relentless shutdown of brick-and-mortar stores — you might think traditional retail is on its deathbed.
Not so. In fact, traditional stores still accounted for more than 85% of U.S. retail sales in 2018, according to Internet Retailer.
On the flip side, e-commerce maintains its growth spurt. U.S. consumers spent $517.36 billion online in 2018, up 15% from 2017, Internet Retailer says. By comparison, sales at physical stores edged up 3.7% in 2018.
Neither brick-and-mortar nor online stores has cornered the market on retail, though. Each type of retail delivers both advantages and disadvantages. Here are six of things to consider:
1. Physical Stores Elevate the Consumer Experience
A 2017 survey by online appointment scheduler TimeTrade found that 85% of consumers prefer to shop at brick-and-mortar stores over online stores.
“The bottom line is customers value the personal experience of the physical store,” Gary Ambrosino, CEO of TimeTrade, said in 2017. “We found that shoppers have done their shopping or discovery online, then go into the store to get help with their final purchase decision.”
Ambrosino pointed out that e-commerce retailers are opening brick-and-mortar locations because they understand the “highly personal service” that can be supplied at a store. Meanwhile, he added, brick-and-mortar retailers are “creating more personal, digital-savvy experiences” to engage shoppers.
2. Online Stores Offer Convenience
While many consumers favor in-store shopping over online shopping, making purchases on the internet is decidedly more convenient. In a matter of minutes, you can browse for what you want and then click a few times to complete your order. In some cases, your order can be delivered to your home or workplace in a matter of hours.
Although consumers can shop at a traditional store in their pajamas, they probably would want to avoid glares from other shoppers. Online shopping, however, lets someone shop at their leisure, steering clear of traffic, bad weather and other nuisances.
Furthermore, online stores are open around the clock and can process purchases every day of the year.
3. Not Everyone Uses the Internet
In the digital age, it seems like every American hop online to post pet photos on Facebook, watch music videos on YouTube, read email or go shopping. Yet an analysis released in April 2019 by the Pew Research Center shows 10 percent of U.S. adults do not use the internet. Nonusers include some people in the following groups:
- People 65 and older
- People with less than a high school degree
- People with household income below $30,000
- People who live in rural communities
As such, online stores cannot reach all prospective customers, whereas physical stores like resale shops typically do.
4. Online Stores Can Expand Your Reach
Let’s face it: Not everyone in the world can visit a physical store. By contrast, an online store can meet the demands of local, regional, national and international shoppers.
So, your online shop — perhaps a consignment store — can market goods to prospective buyers from Dallas to Detroit, and Toronto to Tokyo. This can be accomplished without setting up brick-and-mortar storefronts. In a whitepaper, professional services company Cognizant noted that merchants can fuel growth by adopting a “retail without boundaries” mind-set.
5. Physical Stores Promote Legitimacy
Although consumers increasingly feel comfortable making online purchases, a physical store lends credibility to a business. For instance, as emphasized by Michigan-based Grand Rapids Opportunities for Women (GROW), shoppers might be reluctant to enter credit card data for an online purchase if they are unfamiliar with a merchant, they are unable to physically visit.
“There’s an air of legitimacy that storefronts bring to the table, and believe it or not, some people still like to try it before they buy it,” GROW says. “Face-to-face interaction is a big plus as well — there’s value in staffing your store with knowledgeable, friendly people that keep customers coming back for more.”
6. Online Stores Cost Less to Operate
GROW points out that while starting an online store requires an investment, it “pales in comparison” to a physical store. An Intuit QuickBooks analysis of Small Business Administration data reveals that it costs an average of $32,000 to open a brick-and-mortar shop.
Ongoing costs such as rent, taxes, utilities and labor can build a barrier to brick-and-mortar retail, according to GROW.
Platforms such as Amazon, eBay and Etsy enable merchants to sell products or services “with almost no investment at all,” GROW says.
However, costs aren’t always lower online. For example, a standalone e-commerce store must promote itself through marketing such as social media, content marketing, search engine marketing and email marketing — all which costs money.
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