Should you take your retail business online?
How do you choose from a sleek, professional online shopping website or the allure of a captivating store front?
Both online and offline retail offer a number of individual benefits. So, which is best?
Benefits of online retail
- Reduced overhead costs – Having an online shopping business reduces the need for expenses that would otherwise be essential in an offline venture, including payments for retail premises and staff wages. By saving on these costs, you are able to invest improving your website and marketing.
- An international marketplace – Online retail means you have easier access to a worldwide audience with just the click of a button. Marketplaces such as eBay, Etsy and Amazon allow anyone to set up an online retail store and start selling within minutes.
- Potential for rapid growth – Just like a YouTube video, your online business has the potential for overnight success. With smart marketing and targeting to your desired audience, your sales can increase immediately.
- Captured customer database – Online marketing means targeting your customers just got a whole lot easier. It also means you can capture an assortment of information about who is combing through your site, what they spend their time looking at and gaining insight into what they would like to purchase.
- Customer convenience – Customers like to spend hours of spare time combing through their favourite sites – having 24-hour access means they are more likely to scour and spend online.
Drawbacks of online retail
- Website costs – just like any start-up, your online business is an investment – you need to fork out for planning, designing, creating, hosting and securing your website. In addition to your marketing costs, this all adds up, so you need to ensure your bank balance is equipped accordingly.
- Security and fraud – Unfortunately, your online business doesn’t offer you the chance to lock up shop and call it a day. If you don’t invest in properly securing your website, you may leave yourself open to security issues, such as hacking and transaction fraud.
- Competition – A saturated marketplace means your online shopping business isn’t the only one offering a certain product or service. Increased competition can make it hard for you to differentiate and stand out among the rest.
- Credibility – With thousands of review websites and social media at everyone’s disposal, one negative review can be detrimental to your online business. Building up online credibility takes a lot more time and persistence.
- Lack of personal customer service - As customers are drawn to the ease of face-to-face service, it can be difficult to offer a personalised customer service experience in an online environment.
Benefits of offline retail
- Physical products – In general, customers like to be able to visually inspect (and hold) products before they make the decision to purchase. Having the product physically available makes that choice easy and convenient for the customer.
- Product selection – There are certain products like cars, whitegoods and furniture that customers prefer not to purchase online, making certain offline retail businesses preferable to that of an online store.
- It’s a leisure activity – For many customers, the physical act of wandering a mall, trying on clothing or purchasing retail goods is an activity of leisure. This in turn opens a store up to an increased audience demographic.
- No shipping time – If a customer wants to purchase the product they find in an offline store, they are guaranteed to have it in their immediate possession. The thought of having to wait days, weeks or even months for a particular item can be enough to deter a customer from purchasing online.
- Try before you buy – Many customers want the security of knowing what they are going to purchase is going to be the right choice. Being able to try before you buy makes offline stores preferable for many customers.
Drawbacks of offline retail
- Price point – You may offer the best prices within your physical location, but it’s likely your product or service can likely be found online for a similar – if not, lesser - price
- Limited working hours – Calling it a day at 5pm means you miss out on the customers who have been working all day, as well as those outside the vicinity of your physical store.
- Location – Having an offline store means your location limits your audience. People may travel a certain distance to purchase from you, but you miss out on having access to a larger audience.
- Costs – Significant expenses, including construction, renovations, storage, display costs and staffing are a deterrent for many who wish to open up an offline retail store.
Ultimately, both online and offline businesses offer a range of advantages and disadvantages, each of which can determine their success or failure. However, it’s important to note that an offline business will benefit from online marketing, whether it’s a personal website or strong social media presence.