Physical Or Online Store: Which Fits Your Business Goals ?

 

We've certainly come a long way from the early days of e-commerce when we were all a little dubious about purchasing online. Big players such as Amazon exploded onto the scene and revolutionized the way we shop. Throw in pocket-size mobile devices that allow us to purchase at the click of a button wherever we are in the world and it's no surprise that the eCommerce market is worth billions each year. But what is the best solution? Is it more profitable just to set up a purely online company or do you need a physical shop as well? With the increased competition online, many major outlets including Amazon, are starting to invest in bricks and mortar. Today we'll be looking at some analysis of the pros & cons of both a physical store and an online store and which would be more profitable for your business idea and product.

Table of Contents

TERM DEFINITION

It's one thing to have a business idea & a product to sell, it's another to decide on what type of store would fit this business idea or product, not every product can be sold online likewise not every product can be sold offline. It's important that when you have a business idea and a product to sell, not everyone is willing to buy your product whether online or offline some people solely look for information on the products which you sell. Others feel it's more convenient to shop online with their pajamas on and in the comfort of home, some prefer the goods being dropped off or delivered to their home, and some like to avoid delivery fees and make the decision to trek out to a store and get what they want. By definition;

What is a Physical store?

A physical is referred to as a brick and mortar retail which requires a physical space to have products to sell and display, to have customers come inside to have a look at them, and also for storage. Physical stores can be freestanding structures, a tenant in a mall or a small venue a museum or a public attraction, etc, some of these stores heavily rely on o window shopping: that is when a passer-by passes by and looks at your display product and gets interested in it and actually come inside the store and want to browse. And then there is another kind of physical store that is particular to a small group of people and only they are aware of these stores, they cater to some could be animal health, special needs people, etc.

What is an online store?

An online store is a website where customers can come in browse and order stuff online, online stores can have their dedicated domains or they can have web pages that are provided on social media or online marketplaces. Online stores allow individuals to operate businesses without having to rent space or deal with the overhead of physical retail. Online stores can serve a global population as long as they're willing to ship internationally and navigate other countries regulations.

PROS & CONS

It's important to note that both models have some preferences over the other, however, both physical and online stores remain important drivers of sales each with unique strengths. Some of which are;

Advantages of a Physical store

• Customer service: Shoppers often value input from sales associates when shopping. Whenever a customer is confused in a store, they'll look into the opinions of any associate, their opinions are highly valued whenever it comes to choosing a product or any confusion, regarding size and sometimes store includes a trial which comes in a lot of use for customers thus it increases their satisfaction.
• Product clarity: In physical stores, customers can actually walk in and feel the products and decide whether they want them or not, this increases their satisfaction and results in less confusion with purchases.
• Adaptability: A lot of things such as cars are hard to sell online because, they are very expensive, large, complex, and hard to understand, but in physical stores, customers are faced with it. So physical stores can sell highly complex expensive and large products and they can also get away with selling small inexpensive and straightforward and simple items.
• Shipping: Consumers save the additional shipping cost and take their products home immediately.

Advantages of an online store

• Profitability: Because of a much lower overhead online store often times have a higher margin of making profits than physical stores.
• Liability: Online business owners are not liable for following any guidelines said by a mall or any other sales associate work environment laws cause everything is online.
• Reach: online stores can reach an infinite amount of people so basically your customer base is open to all, thus you can be international.
• Customer info: Online stores can gather a lot of info about their customers just by looking at their customer habits such as which page they visited to know they look at the most and to know which product they like the most. This information and reviews can help you grow, and furthermore online business owners can get info on their customers such as their email address and home address which they can use for further marketing at any given time.
• Simplicity: Online stores have the potential to be extremely simple
• Low barrier entry: it is easier to open an online store by purchasing a domain than actually opening up a physical store and if your pay is slowed you don't have to worry about business risks such as paying any rent or employee wages because it's just you and your website.

Disadvantages of a Physical store

The question of affordability probably lies at the heart of why some businesses forego the development of physical stores. When you are just starting out as a retailer, you need to keep the cost as low as you can and maximize those profits. Of course, another downside of having a physical store is the cost, you have to find the right premises, design it with your brand in mind, hire staff to work there, and cope with all the other costs such as rates, electricity, and security. Your access to a wider customer base is not as great as with an online provision but that's not always the point of a physical store.

Disadvantages of an online store

It's not all positive for online stores, though most of it is. There are the issues of security and protecting payments, and the wider damage on social media that can be done to your business if you get it wrong. There's also the investment you have to put in with marketing, building your brand online, and reaching out to potential customers. Then there's the work you have to do in building images and perhaps even videos that shows your products in the best light.

HOW TO DECIDE WHICH TYPE OF STORE TO OPEN

With the advancement of e-commerce today most business owners, sellers, and upcoming entrepreneurs want to take advantage of the internet guest and have a spot for themselves online.

1. Marketing approaches: Physical stores' marketing approaches largely depend on whether they are independent businesses or franchises. Independent businesses often develop local advertising strategies, relying on local publications, radio stations, signage, and word-of-mouth. Online stores typically rely on a mix of social media, online publicity, and paid advertisements to their ideal demographic, making marketing easier. If an online store can gain recognition through a creative social media presence, it may spend substantially less on paid advertisements. Online publications that write product recommendations also seek unique online retailers to share with readers. Deciding which marketing approach would suit you and your customers on how to decide on what type of store to open for your business idea and product. Related posts: Physical stores often have greater overhead, raising the cost of doing business. Contributing factors include:
   • Rent
   • Utilities
   • Employee wages, benefits, and payroll taxes
   • Maintaining inventory
   • Local advertising
   • Business licenses and permits
   • Display fixtures and decorations
   • Owning a web domain
   • Cleaning and maintenance
   • Insurance
   • Computers and point-of-sale technologies

   Businesses that own online stores might be large enough to require production and storage facilities staffed by a team of employees. If so, may costs overlap with those of physical stores? Assuming a business is relatively small associated costs might include:

   • Web domain or online marketplace fees
   • Online advertising
   • Web maintenance and design
   • Third-party order fulfillment
   • Inventories or the resources to complete orders
   • Business licenses
   • Payment of processing services

2. Hours of operation: Physical stores typically have set hours of operation and might close during holidays or on certain days of the week. This limits when sales can occur and require communication between the store and the public. Customers can access and purchase from online stores at any time, enabling more sales and greater convenience.

3. Customer experience: Physical stores attempt to provide an enjoyable customer experience by educating sales staff, creating engaging displays, and encouraging customer interaction with products t through sampling or demonstrations. Talented sales associates help drive business by establishing strong customer bonds that lead to repeat business. A Physical store might spend considerable money on seasonal or promotional decorations that attract window shoppers or on designs that make a store seem sleek and attractive. Online stores create a customer experience with creative content posted on social media and uniquely designed web pages. Online stores must have an intuitive layout so visitors can find what they're looking for and clearly view the products they're considering. Online stores also have to plan for how to handle returns or customer questions. They usually offer customer service via email or phone.
4. Operational flexibility: Typically, physical store owners have to commit to a space and make regular sales or face closure. Moving locations to cut costs can be a major challenge, as it risks losing business gained from a convenient or appealing location. Online stores can adapt much more easily. Online businesses usually avoid interrupting their operations, but if a site owner wants to change domains or take time to redesign their website, the financial consequences are less severe.
5. Competition: Physical stores have to compete for both with similar stores in their geographic area and in, many cases, with online retailers. Business models that rely on physical stores have to consider if their product sells better in person than online to ensure demand is sustainable. Online stores have to compete with the major online marketplaces that can usually offer low prices and faster shipping. The online stores that can offer unique products sold nowhere else are therefore better suited to succeed.

TIPS ON HOW TO DECIDE

1. Make a list of your strengths and weaknesses. For example, if you're detail-oriented and good at math, you may do well in accounting businesses. If you're more artistic, something like interior design would make a better choice.
2. Have a look at your bank statement and credit report. Most physical/retail businesses, require a significant financial outlay as you get started. Online businesses such as free-lance, may require little or no money to start.
3. Browse the business websites and magazines for ideas. If you really have no idea about what type of business you should open, you will get ideas when looking at lists of potential businesses. Study your local market. Once you have a business idea or two in mind, research whether they are viable for your area. For example, if the median age of your community's residents is 55, you will want to scrap an idea to open a game store. If your ideas do have possibilities, you will want to look at the competition and see what people are willing to pay for what you are selling.
4. Know about restrictions, local laws may restrict the type of business you can own. For example, you may need a license to pen your business. Also, zoning laws may prevent you from running a certain type of business from your home.

CONCLUSION

Although online shopping may be more convenient, shoppers still prefer to make their purchases inside an actual store, new research finds. Nearly 40 percent of consumers make purchases inside a physical store at least once a week, compared to just 24 percent who do the same online, according to PwC's annual consumer survey. Even though online shopping may be easier than going to a store, many different factors are driving shoppers' decisions to make the trek out to a store. The research found that 65 percent of consumers said they shop in-store to avoid delivery fees, while more than 60 percent said it allows them to have the item immediately. Additionally, 61 percent said they like trying on the item or seeing it in person before buying it.