So you want to start a retail
business? One of your first choices is
whether to open a brick-and-mortar store, an online business, or a combination
of the two.
There are both advantages and
disadvantages to selling online. Here’s
a closer look:
Low startup costs. You don’t need to buy or lease store space
nor invest in inventory displays, alarm systems, or window displays. You won’t have to purchase insurance, payment
processing equipment, etc.
Fewer geographic limitations. With a physical
store, you can only reach patrons within a modest traveling distance. With online selling, customers from all over
the United States, and even foreign countries, can purchase your products.
Simple setup. f you establish a physical store, you can
expect to make a major marketing push at the beginning. Online marketplaces, by design, will help get
the word out for you. And you don’t have to be a tech guru to sell through
established entities like eBay and Amazon. The infrastructure is there for you. If you do decide to start your own website, there are many turnkey
e-commerce solutions to make it easy.
Smaller staff. With online businesses, you won’t need to
hire anyone to process transactions, provide security, man dressing rooms, or
clean up inventory each day. And online selling options like Fulfillment by
Amazon help you handle much of the busywork of e-commerce without having to
provide the manpower.
Sales never sleep. You’ll have to lock up your physical shop
each night, but if you sell online, you can keep doing business around the
Greater flexibility. Brick-and-mortar stores bind you to restricted hours, but
you have much more freedom to choose your own working hours with online
Better data collection. To market to your target customers, you need
to understand them, and good customer data makes this possible. Collecting data is very difficult through
physical stores but far easier online thanks to simple analytics programs. You can use this data to optimize your
Of course, there are some challenges
of online selling to include:
Less impulse buying. With an online store, you won’t be able to lure
in customers with those shiny deals at checkout nor interest them in
strategically positioned sales racks. People want online shops to be quick and uncluttered so they can “get in
and get out.” Online customers are more
prone to purchase the one or two items they need and then exit your store.
More competitors. There may not be a physical store like yours
around for miles, but the online marketplace is very crowded. You’ll have to work hard to stay ahead of the
Time-intensive. Though online selling affords more flexible
hours, it doesn’t necessarily require fewer hours. Many people open an online store thinking
that they can make their millions overnight, but you must put in a lot of time
to market your store, optimize your merchandise, price your products
competitively, respond to customer queries, and more. Plus, rather than setting
out a whole rack of different merchandise, you’ll have to list products
individually online. This will require
you to take photos of each unique item, post a product description, and
Marketplace fees. If you sell trough a third-party website,
they’ll take a cut of your profits. That
means you need to sell more to make more. And don’t forget that you’ll have to pay shipping costs to get
merchandise to customers, which can gobble up profits.
Weigh the options and decide what
works best for your schedule, budget, and store model. Note, however, that in 2017, e-commerce
accounted for 13 percent of total retail sales and 49 percent of retail growth.
Though there are pros and cons of both physical and online stores, it’s risky
not to embrace at least some online selling options.