Online vs. Brick and Mortar – Which is Best?

In the age of eCommerce and the recent bankruptcies/closures of The Limited, American Apparel, Wet Seal (the list goes on) you may think choosing to start on online business vs. brick and mortar storefront is a no brainer. But it’s not as cut and dry as it seems. Retail stores that have adapted, are thriving, while some online businesses turn out the lights (figuratively speaking) within the first year. There are definite pros and cons to both sides of the coin – the key is to understand them, and your own business goals, before taking that next step.

Brick and Mortar Business Start up Pros & Cons

Pro: The location can speak for itself.

This is one of the strongest advantages to setting up shop in a physical location vs. online only. Your storefront serves as a marketing tool in and of itself. Location is everything in this instance, and with the right one, passersby will naturally walk into or drive by your store. Between the natural curiosity of those in the area and personal referrals/word of mouth, having a great location can help you build your brand locally from the bottom up.

We’re lucky that Grand Rapids has tons of retail and shop local initiatives to support local brick and mortar businesses!

Pro: Brick and mortar takes the cake on customer experience.

No matter how many people are buying into the convenience economy of the online atmosphere, a website just can’t compete when it comes to customer experience. Standing apart and standing strong as a physical storefront requires capitalizing on this edge by making your store more than just a shopping opportunity. It’s within this landscape that entrepreneurs can truly craft a unique experience and express their brand creatively, converting first-time customers to loyal brand advocates.

Pro: Brick and mortar assumes brand legitimacy and longevity.

Online retail is now common place and as more stores move in that direction, people will most likely feel increasingly secure spending money online. But still, it’s hard to enter credit card digits onto a site you’ve never really heard of before, no matter how much you want those boots for the fall. There’s an air of legitimacy that storefronts bring to the table, and believe it or not, some people still like to try it before they buy it. Face-to-face interaction is a big plus as well – there’s value in staffing your store with knowledgeable, friendly people that keep customers coming back for more.

Con: High startup costs + general operational costs = more risk.

A higher upfront investment implies a greater risk involved from the beginning. Rent, taxes, employees, utilities, etc. can build up a barrier to entry brick by brick. And if things don’t go so well, you’re out a lot more than just the cost of a website. It isn’t all or nothing though; if you’re just starting out, perhaps consider lower cost alternatives to test the market such as pop up shops, booths, or renting a room within a thriving marketplace.

We know of several great local pop up shop options, too! 

Con: Permanency within a changing landscape.

Locations are supposed to work for you, but just because your store is sleek and mainstream, or adorable and inviting, doesn’t mean your neighbors are following suit. You have no control over what goes on around your store, and what may have been an up-and-coming thoroughfare 5 years ago, could easily turn into no-man’s land in the blink of an eye.

Con: Schedule inflexibility

It’s no secret that brick and mortar business owners usually work their tails off, at least in the very beginning. Being present in the store is a big deal and not the kind of online “present” that means you’re ordering a coffee, answering emails, and breaking up a sibling fight in the backseat at the same time. Be prepared to devote some serious face time towards the success of your business.

Online Business Start Up Pros & Cons

Pro: Low startup cost.

Starting a website is an investment, sure – but in the larger scheme of things, it pales in comparison to an actual storefront. With minimal operation expenditures such as rent and utilities, you can get your business up and running quickly, with less capital investment, and start selling! In fact, you don’t even need a website. Services such as Amazon, eBay, and Etsy are just a few ways to sell your products or services with almost no investment at all. Failure isn’t completely life changing in this case and people tend to have more freedom to try new things when there isn’t quite so much to lose.

Pro: The innate convenience of eCommerce.

Raise your hand if you ordered all your Christmas presents online last year! There’s nothing like having a cup of tea and comparison shopping in your jammies. The ability to browse on your own time without outward sales pressure makes eCommerce a very appealing choice. With products delivered directly to your door in a day or two, the convenience of the whole process is attractive and addictive.

Pro: Schedule flexibility.

Online entrepreneurship means you can work anywhere, anytime. Whether a child comes home sick from school, or you feel like wearing yoga pants for the second day in a row, nobody knows and nobody cares- online, things are still running smoothly.

Con: Nobody knows you exist.

An online store is certainly simpler to kick off than a brick and mortar storefront, but how do people know you exist? Nobody is walking by organically and only so many friends can like your Facebook page. You’ll need to allocate more resources, budget, and time to marketing in order to let customers know who you are and that you’re open for business. Things like SEO, pay per click advertising, social media management and content marketing are going to be your new best friends.

Learn more about how social media and blogging can work for your online business.

Con: Less legitimacy and consumer trust.

It’s difficult to build meaningful relationships with customers when there’s no personal interaction. That’s why online, you need to go the extra mile to give customers confidence in your store and assure them you’re a trustworthy brand. If your online presence doesn’t grab their attention if the first few seconds, consumers move on and most likely won’t return. You’re just another blip in their Google online history. A scary thought to be sure, online retailers need to provide potential customers with as much knowledge and information as if they were standing inside a physical store, just in less time.

Read more about e-Commerce with our Entrepreneur Insider Recap.

GROW Can Help with Any Business You Want to Start

Choosing between offline and online retail is a challenge, but the key is to understand who your target audience is and how best to reach them. That should help guide your business development and always be at the forefront of any major decision. GROW is dedicated to helping you with these big decisions. If you aren’t sure where to begin, check out an Intro to GROW class or contact us today! We can’t wait to hear from you.

Sources & references you can check out

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