The definition of retail space has altered over the last decade. It’s not a new trend for retailers to take their retail space and promotions to the online realm — for larger retailers, e-commerce is just a reinforcement to their physical plan-o-grams. What does this mean for smaller, more independent retailers, though? When a choice has to be made between spending hard-earned money on a physical retail space or marketing to the online world, which option would garner greater returns?
Let’s consider the pros and cons of physical retail space and e-commerce:
Physical Retail Space:
Pros: There is still a vast demographic that is not digitally savvy or prefer to do their shopping offline. Having a physical retail space will enable this demographic to continue their patronage to your brand. Customer service will still have a personal touch to it given that you would be present at the store greeting them face-to-face.
Cons: Property costs – Above and beyond paying the monthly bills of your lease or mortgage, you also need to consider the cost of storing inventory. Shelf space is also valuable real estate when you consider the return on each square footage. If an item is less visible or unappealing to customers, it takes up room from merchandise that might otherwise be more successful. Customer service is also key when you have a physical retail space.
E-Commerce:
Pros: Not only can you appeal to a much wider demographic, but you can do it at a much lower cost. Start-up costs for a fully functional e-commerce site can be hefty, but the upkeep — should you choose a relatively simple back-end management system — will be significantly less than that of a physical retail space. Your approach to servicing customers will change a bit, but the principles and client relationship management (CRM) should remain the same.
Cons: Competition is fierce in general but even more so online. You are no longer competing with retailers in your area but with brands across the globe (especially those that offer worldwide shipping). You miss out on the demographic that still prefers to shop offline or are wary of purchasing products that don’t allow for an easy return if the merchandise does not fit.
These are just a few pros and cons between physical retail space and e-commerce. Can you think of some more?