Is your Online Business Ready for a Retail Location?
Has the concept of opening a storefront ever crossed your mind? If your online business is thriving, you may be wondering if it’s worth it to trade in your low overhead for monthly rent, in-person employees, and taking on a whole new marketing approach.
All of these questions can be overwhelming when you’re running a small business on your own. Luckily, we’ve done the research to help you decide. Here are a few signs that you might be ready to make the jump to operating a brick and mortar location.
It makes sense for your audience
Ask yourself: who are your customers and what are their shopping habits? If you cater to a younger audience, you might find, for instance, that they prefer to do their spending online. According to one report, millennials are 60% more likely to make purchases online. Older generations, however, may still prefer a brick and mortar experience.
The products you sell also play into this, as research shows that although 46% of customers may prefer to purchase TV and video devices online, only 16% say they shop online for makeup, cosmetics and fragrances. Doing your research on your customer demographics here is key.
You cater to a specific zip code
Thinking of opening a retail location in Omaha, Nebraska? It might make sense if many of your orders originate from there. “If your thriving online business is shipping endlessly to Beverly Hills, then that might clearly indicate that a Beverly Hills retail location might be desirable, feasible and highly receptive to the online side of the business bringing customers into the shop,” says business management and growth coach, Eric Goeres. While people may travel to shop at your shop your location, it’s the local customers who will likely make up the bulk of your retail purchases.
Your product works better when tried in-person
When it comes to returns, the online sales format typically results in customers sending products back and you refunding their money. But your business could benefit from an in-person location if you offer products that can be easily exchanged for something else. With clothing, for example, customers can arrive at a physical store with returns and leave having exchanged their product for something else, allowing you to keep that revenue. This works well in situations where customers are returning an item like an ill-fitting sweater. They can come in to exchange the sweater for a different size, while also picking up a dress – and maybe some earrings – that caught their eye as well.
Your customers are demanding it
If your customers are consistently giving you feedback about wanting a physical retail space where they can interact with your products, take note. “For some products, customers want to be able to physically assess the products before purchasing,” explains Sai Blackbyrn, a CEO and business coach with Coach Foundation. Meeting this need for your customers, he says, can significantly boost your revenues – not to mention increase customer loyalty. This is why brands like Peloton, a company known for largely selling online, has been expanding retail locations across the globe. Customers like to sit on their bikes before committing to such a hefty piece of fitness equipment.
You’re able to offer a hybrid approach
In the era of a pandemic, curbside pickup, aka ordering products online and then having them ready to be delivered to your car upon arrival at a store, is more popular than ever. According to Medallia Zingle’s recent COVID-19 and The Future of Commerce survey, 87% of shoppers still want shops and restaurants to continue offering curbside pickup options into the foreseeable future. If you can employ the resources to do this, curbside pickup can be a great way to cater to your online customers and offer them a new way to access your products.
You want built-in marketing
Many online brands are discovering that retail locations are excellent places to interact with their customers — and for the customers to interact with their products. “Establishing a physical store in a local market instantly extends the company brand to every consumer passing by, serving as its own form of marketing, and attracting new consumers,” explains Eric Grindley, founder and CEO of brick-and-mortar marketing solutions company Esquire Advertising.
“Apple has done this arguably the best, but companies from Gateway to Casper have dabbled in retail to support their thriving online businesses,” says Goeres. Retail, he adds, is a great way to get your product in potential customers hands or on their backs. “And if you look at retail as being a customer acquisition gateway, where lifetime value is a consideration, then a single visit can convert someone into a lifetime customer.”
It’s expensive to ship your product
Shipping can be expensive and sometimes there isn’t much of a way around that. However, tacking on shipping fees for an online purchase could be losing you customers. One study found that high shipping costs is the number one reason that customers abandon items in their digital cart. Especially if most of your customers are local, the lack of shipping fees could entice more customers to shop with your business.
Deciding whether or not to make the jump from an online only business to a model that also incorporates retail locations can be daunting. But if you decide that your business is ready, it can be a great way to expand your brand and to attract new customers along the way.