Online Retail versus Brick and Mortar

If you’re contemplating starting a retail business, you may be on the fence about whether to make it a virtual store or a brick-and-mortar. Here are the pros and cons of each to help you in your decision.

Online Retail Benefits

The really wonderful thing about starting an online retail business is how easy and affordable it is. As long as you’ve got your inventory and an ecommerce website,  you’re ready to go. You can operate from anywhere, and you don’t have to pay high-priced commercial rental rates.

Even if you don’t have a fancy ecommerce website, there are easy all-in-one options available for you, such as Amazon, Etsy and eBay. Each offers built in ecommerce solutions and credit card processing. All you have to do is plug in your product descriptions and upload a photo. The bonus is that these sites get a ton of traffic, so you’ll get more exposure than you would by starting from scratch with your own site.

Getting found online is also fairly easy, and definitely affordable, if you use social media and internet marketing.

Online Retail Drawbacks

Some items don’t sell as well online as they do in person. If you’ve got high end handmade crafts or art, you can post them to Etsy, but it might be months before anyone stumbles upon your glassblown vintage owl collection. If you sell in a category with a low search rate, you may find an online ecommerce business less successful than a physical storefront.

While marketing your website is easy, it does take effort (really that’s the case with any business, online or otherwise). If considering starting an ecommerce site, make sure you’ve got time and budget to dedicate to marketing it.

Brick-and-Mortar Benefits

Having the perfect store nestled in a row of eclectic shops and restaurants can help you connect with your community. Your shop can be a hangout spot for your customers, who are more likely to buy from you repeatedly if your store is homey enough to make them feel comfortable.

Being located near other high-traffic retail can give you a boost in sales that you wouldn’t see online. Consider this when shopping for real estate.

Brick-and-Mortar Drawbacks

There’s one thing that’s hard to really grasp before you’re knee-deep in debt for your retail store: it’s expensive. You’ve got your rent, inventory, salaries and other overhead, and you have to sell enough product to cover all of these expenses each month. Even more if you actually want to turn profit. You lock yourself in to years of expenses once you sign that lease, so it’s a commitment you have to be willing to accept long-term.

Sometimes there are quirks about the location you choose that you don’t see initially, like a difficult-to-maneuver parking lot, or proximity to a business that drives yours away (tattoo parlor next to your doll shop?). These can cause you stress and financial troubles that force you to come up with a better solution sooner rather than later.

Whichever option you choose, do your homework on what kind of investment you need, as well as what locations would be ideal for your company.

Photo credit: bjearwicke.

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2 responses to “Online Retail versus Brick and Mortar

  1. I recently interviewed a small batch baker who started out online, felt they needed a bricks and mortar store, and soon learned that online was the way to go for them. Seems that the whole bricks and mortar experience wasn’t all it was cracked up to be and, quite frankly, was a financial, and logistical, nightmare.

    Online is definitely the way to go for many small businesses. Online entrepreneurs just need to be creative in the way that they market their business so that they stand above the sea of competition.

  2. I still have an online art website even though it’s not my primary business anymore. I do notice that there are certain price points which will work online. Very high end pieces do not sell and I guess people want to see such pieces in person before investing in high priced art. Lower priced artwork under $200 sells moderately well and while pieces under $100 will usually sell well, the margins with low priced items are often not even worth it. So the ideal price range I find for online art is between $100 to $200.

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