A brief examination of the pros and cons of physical (brick and mortar) stores and virtual ones.
Over the past few days, online retail giant, Amazon.com, has been in the news with regard to its plans to open a physical bookstore in New York City. The store would not be the company’s first: other have already been opened on the west coast of the United States, and so speaks to a broader strategy. However, this approach seems to fly in the face of all we had been led to believe with respect to the death of brick and mortar stores .
Over the past several years, brick and mortar stores have been on the decline. Globally, many of the large retail chains have been closing stores and paring down their footprint.. Further physical stores are competing directly with online stores, which can sell their products cheaper. In the Caribbean, for example, it can still end up being cheaper to purchase certain goods online – even when shipping costs and customs clearance fees are also factored in. As a result, entrepreneurs and potential business owners are more inclined to think long and hard weighing the pros and cons of establishing a brick and mortar store versus other options.
Startup costs
Generally, the start-up costs for a physical store, or office, are considerably more than for an online presence. Securing the premises, decorating it, and acquiring the goods that will be sold, are not only expensive, but also can be very involved processes for which external professional expertise may be essential. In setting up an online store, there are still expenses – such as acquiring the domain name, building the website and securing electronic payment functionality. However, due to the global competition that exists in that space, a broad range of offerings and price points are available.
Overheads, overheads
Following from the initial startup costs, the ongoing costs to maintain a brick and mortar store tend to be considerably more than an online one. In addition to the storefront, stock and inventory, along with the space in which they are housed must also be maintained and staffed. On the other hand, for an online store, the storefront is virtual, and similar costs might be incurred with respect to maintaining stock and inventory; though it may be possible for some cost savings to be realised.
Convenience
Most physical shops are open for fixed hours, which may be inconvenient for the typical shopper, who might be otherwise engaged during those times, and may have to make a specific effort to visit a store during its opening hours. On the other hand, online retail platforms tend to offer 24/7 access, convenience, and easier searching and browsing for products. As a result, they are available at the customer’s convenience and not the other way around
Customer Experience
While there may be many benefits, especially cost-related ones, in having an online storefront, physical stores outshine online ones in terms of providing customers with sensory information and experience. With physical stores, customers can try, hear, feel, taste, smell or even try on (or try out) a product before making a purchase.
In summary, though online stores tend to offer several benefits when compared with brick and mortar stores, they both have their owns set of pros and cons. Amazon is using its stores to enhance the customer experience: visitors being able to interact with its (Amazon) products, along select others that they carry. Accordingly, there is no one-size-fits-all strategy. Business owners need to weigh the pros and cons, based on their needs and imperatives.
Image credit: Rebecca Schley (flickr)
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Yes they do in certain ares for certain merchandises.
While there are many advantages to online shopping as detailed in this article, Brick & Mortar will always exist although with a much smaller footprint, Why? ‘Touch and Feel’ is still an important part of the shopping experience. I think we have seen the bottoming out of the large retail footprint which will gradually be replaced by smaller physical ‘showcases’ where Customers can interact with the physical product and then purchase online.
Probably the presence of brick and mortar retailing goes a bit deeper than the shopping experience of touch and feel. There are quite a number of limitations that online is exposed to, in terms of the basic functions of retailing and what it entails to the wider shopping public.
But also there are a number of underlying business fundamentals peculiar to each that will continue to strike a dividing line between the two; hence making brick and mortar hold its own ground.