A retail store were physical structures that people built with brick and mortar. Today they are more known as a retail store or physical store you would see on the street.
As technology improved, we were able to create technology, plywood, and other construction materials. But the name stuck, and any physical store today is still called a brick and mortar store.
Now that the internet offers a way to build you own online business, do you still need to build a a store offline?
What are the pros and cons, and what are the differences between a physical store and an online store?
Before we get into that I do want to explain to you why you should consider and online store over any type of physical store. Times are changing and you need to know why.
Have you heard of the retail apocalypse?
In 2019 alone 1000s of retails stores have shut down. Why is this happening? The rise of online store and people who run dropshipping stores is increasing and it's killing the retail store industry.
Is this bad? well, if you want to start a physical store it could be but fact of the matter is, times are changing and people need to keep up.
Can you still make money with a brick and mortar store? Sure you can! However, if you don't sell online as well your chances of failure are high.
In my opinion to sum up this situation, It's going to be like video stores all over again. If retails store are not willing to also sell online and build an online ecommerce store then they are going to find it hard to stay in business.
Brick And Mortar vs Ecommerce
Apart from the obvious physical difference, there are other factors that divide the successes and failures of these two stores. Many experts say that 90% of physical businesses will fail in the first five years, so you have to carefully consider your decision before putting up one.
This is what you need to know before starting an online business with a physical store or online store.
Physical stores need land, a place to actually have a store. This land may be owned, rented, or leased. An online store, on the other hand, does not need a land but an online domain, which you can buy for as little as $10.
With a physical store, you can only operate on that specific location, unless you have other branches in other cities. Online, the whole world is your marketplace.
The physical store also has limitations. What this means is that you can't operate in other places unless you build more store or in some cases get a permit
Online transactions are pretty much limited to people who have credit or debit cards, or those who have an e-wallet like PayPal or Skrill. In the physical world, online wallet as a mode of payment are rarely offered, and most people prefer using cash or credit cards.
You would also need to contact your bank and get a merchant account created if you run a physical store. Online that's not really the same. You could sign up to someone like Stripe and be up and running within minutes.
With an online store you need a payment processor to take payments. If you are taking credit card payments physically, you only need a credit card terminal, which you can get from a bank if you have a business account with them.
Marketing a physical location is more difficult than an online one. With a offline retail business, the consumers need to get the address, and then travel and visit you. You need to be able to create a good impression to convince a person to get off his couch and try your products.
With an online store, your products are accessible with just one click, and it is easier to convince a person to visit your website because there is no risk of loss. In the physical world, the person has to spend time travelling, spend money on gasoline to get to your store
As the time passes on, the customer’s interest on your brick and mortar store will get lost, and you will lose many sales this way, so you need to spend more on advertising to remind them to go visit you.
Online, the customer has nothing to lose. All he has to do is to click on your ad, then check out your products. What this means is that you are less likely to spend money on advertising and marketing for an online business, and get better results.
Physical stores have an advantage because your store clerks have physical interaction with the customers. This is an opportunity for your staff to make the customers to feel special, answer their inquiries, and provide them with high-level services. The only problem is is cost a lot of money to sire full time workers.
With ecommerce stores the customer is left on his own. He has to browse your store, and there is nobody to explain anything should he have questions. Even if you have live support, nothing beats the quality of a personal touch.
Usually a customer has to wait 24 hours for simple information like the dimensions of a product. If you missed putting this in the product details, your consumer may start looking somewhere else.
In a physical store, the staff can answer this question right away.
Both types of stores have expenses, and here you can decide which one has the less overleads
Physical Store Expenses
- Rent or lease plus taxes on the property
- Utilities like electricity, gas, and water
- Employee salary for your cashier, facilities team, stock and inventory team, and customer service staff
- Furniture such as shelves, decorations, lights, and other hardware
- Other office needs like paper receipts, plastic or paper bags, point-of-sale machine
- Marketing expenses
Online Store Expenses
- Shipping and packaging expenses such as boxes and gasoline for driving to the carrier
- Unwanted expenses for product returns if it was broken in transit
- Marketing expenses
- Web hosting services
- Employee salary for the people maintaining your website, if there are any
As you can see, there are more expenses in operating a brick and mortar store. However, you need to carefully think if you can convert your physical store into an online one, or have both.
Get More Sales With Mobile Traffic
Now that almost everybody has a smart phone, traditional marketing tactics no longer work as efficiently as they did before when there was no internet.
All businesses today need an online presence, even if they do not have an online store. You will typically observe this in businesses that belong to the restaurant industry. You cannot operate a food joint 100% online, but you need to be seen online.
Here are some recommendations so you can improve your sales physically by using mobile technology.
Run Social Media For Your Store From Anywhere
Today, you can easily tell people from nearby cities that you are here, that you exist, by showing them photos of how your physical store looks like, and what product they can expect from you.
You cannot do this without an online presence. You can create your online store, which is not exactly a store but an identity, by putting up a website or a social media channel.
Brick and mortar stores that can ship products typically build a store online. The store may come with an order processing method, and the store will deliver the product to the customer either by shipping or by local delivery.
Restaurants do this all the time. They have apps that allow customers to order, and the food will be delivered to their offices or homes. So what Im trying to say if you can build or use apps along with your store to increase sales.
A social media page is great for a physical store that does not offer shipping or delivery. Basically, the social media page will be used to attract customers, get likes and followers, and launch contests to get more and more people to visit your physical location.
You can use social media or Google to advertise online for your physical store. If you use the right keywords to advertise, you can expect Google to show your and if someone from that specific location searches for your chosen keyword.
Let us say your business is a pasta restaurant located in San Francisco. If you advertise in Google, you can use the keywords “pasta” and “San Francisco”, and Google will show your restaurant to a person who searches for “pasta restaurant in San Francisco”.
Google can also show results to someone currently in San Francisco who types the word “pasta” on the Google search engine.
If you do this, you will give yourself an opportunity to be at the top of the search pages, and make yourself more visible to customers who do not even know who you are. This is a great advertising strategy if you are targeting tourists or people who live in nearby cities.
Facebook, Instagram, and other social media sites work in a similar way. Just remember, Google is best used for paid search, which means you are paying if people are searching for a product like yours.
Facebook or social media marketing is called paid social, which means your ads will automatically show to people who may have an interest in your product even if they did not search for it.
You can set all of this up with a smart phone and get traffic to your store!
Create an Online Showroom
One way you can boost sales on your business is to create your own online showroom. This applies practically on all industries, and there is no need to deliver your products if you do not want to ship.
Most people do this on a lap top and I recommend you do, However, you can share the showroom and update it via your phone.
In an online showroom, you are showing the customer what products are available, and if possible the prices. We use Shopify sto do this.
As mentioned earlier, people who see marketing material for a brick and mortar stores may not take action because of the following reasons:
- They are afraid the products are not worth it
- They do not know what to expect from the store
- They do not know the prices so they might think it is too expensive
- They do not want to go to the store only to get disappointed
If you have a showroom, you can make customers feel confident about what you offer. They are more likely to come to your brick and mortar store because it looks great on the pictures, they know the price of the products, and they know what products you sell.
You can build an online showroom in your store, or use social media. Facebook allows you to create a page where you can add a menu of your products for sale.
If you have a large inventory, you do not have to add all of them. What’s important is that the online audience get a feel of what your physical store offers.
Pros & Cons of a Brick and Mortar Store
A physical store is a dream come true for many entrepreneurs. For some reason, a brick and mortar gives you a sense of accomplishment. It gives you the feeling of being a real businessman, and not just someone who is trying out an online business that can or cannot succeed.
With a brick and mortar store, you will not feel like an amateur who is just trying out what works or not. It is a serious business that requires a lot of planning, and a lot of money.
But like everything else, it has its advantages and disadvantages. Here are the pros of a brick and mortar store.
Superiority and Trust
A brick and mortar store is a lot more trustworthy than an online store. Because you have physical presence, people know where to find you. They know that you are a real business and not a scammer who will run away with their money.
If you operate a physical store, people will also think that your products are much more superior than the online stores because you spent a lot of money just to put up your business, which means you will not compromise product quality. Online, people know that sellers will sell anything and usually is cheap quality products.
With a physical store, there is no long wait time for service. There is no shipping required, and the customer can enjoy the product in your store or at home. The customer also does not have to go through online chat, over the phone, or wait for an email to be serviced.
In a physical store, you have employees who will answer a customer’s inquiries right away. They will also receive first-class service if they need additional services like special delivery for bulk items.
Goods are physical
In a physical store, the customer can check the quality of the products they buy. They can touch it and even try it. Online, this is not possible.
Pictures look good, but many consumers are disappointed once they receive the product because they do not seem to be what they are from the photos.
Online, customers can buy the wrong size. In a physical store, they can try it, feel the texture, get a demonstration, and so much more. Once they make a purchase from the brick and mortar store, they are not likely to return it, unless if the product is low-quality and got damaged within the warranty period.
Also, most online shipping companies may ship the wrong item. This is a huge problem and costly one. In a physical store, this is not likely to happen because the customer can check the contents of the package before leaving the store.
Shopping online is a lonely experience. The customer is alone and cannot talk to anybody. In a physical store, the person can shop with a friend, get his opinion, or take his entire family.
The customer can also talk to the staff, make jokes, and have a good time. This can never happen in an online store. And because humans are social creatures, many would rather go to a physical store to experience social events than browse for things to buy online.
There is little to no personal connection online. It is too stiff. In the physical world, you can talk to consumers, get to know their names, their babies, and so much more.
It is this kind of experience that makes a brick and mortar store different. You can understand their problems, make recommendations, talk to the children and offer the best toys, make an upsell and try to convince the customer to buy, and so much more.
No shipping and returns
Returns of items from a physical store is rare. It happens from time to time, but not as often as it does in online stores.
The cost of a return is financially painful. He customer has to ship the product back, and then you have to refund the customer. The refund you have to pay must include the shipping that you already spent in sending the item to him, and this money is lost. You cannot retrieve that money anymore.
In physical store, there is no shipping fee. The customer has to go back to your store and get his money back. So far, you only lost the capital for that product, but there is no added shipping cost.
Security from online thieves
Online stores work because of payment processors. Sometimes, these things can get hacked.
And if you are an unlucky victim, you will lose your money and it is doubtful if you will even be paid by the payment processing company.
Here are some of the things you need to think about before putting up a physical store.
Big capital required
You cannot put up a brick and mortar store unless you have tens of thousands of dollars. You need to pay for construction, equipment, furniture, and so much more.
Even if you rent a place that is already built, you still have to pay for construction cost because you need to turn that place into something that fits your business.
In addition to the construction cost, you need to pay for your inventory. You need to buy in bulk, and then store them. If your space is not big enough, you may even have to rent a warehouse.
A brick and mortar store usually has a rent. If not, then you pay for a lease. The only exception here is if you own the place.
Nevertheless, you will still pay for monthly expenses like power, water, gas, heating, and so much more. You also have to pay for the salary of your employees. In a brick and mortar store, you need more employees to be able to service more customers.
Tiring to manage
A physical store require constant attention. This will eat up your time. If you manage one, you need to be there to ensure that quality is never compromised.
A physical store requires your presence as an owner and your participation. This is a huge sacrifice, and you can only get away from it once you have hired a manager who you can trust to be honest, one that can operate the business while you are away.
How To Make Your Brick and Mortar Stand Out
As you know by now, the only people who will bother to come visit you are those that happen to pass by or drive by your location. The result of this is that you are limiting your opportunities in increasing your sales.
Here are some ways by which you can make your physical store different, and much more attractive, to consumers.
People love events. Events make life much more exciting, and people will always love to have some fun. There many opportunities to create events in a year, and all you have to do is to make use of holidays and national celebrations to spark interest.
Here are some examples.
- Valentine’s Day
When creating events, remember that you are trying to foster the spirit of a holiday season. Decorate your store with appropriate themes. What this does is it makes people want to come by to take selfies and post on their social media channels.
Apart from getting sales, you are getting free advertising by people who have been to your physical store.
Create Promotions and Deals
People love discounts. To drive foot traffic to your physical location, offer deals that they can only get if they visit your physical store.
Examples of promotions that people love are shown below.
- Buy 1 take 1 free
- Bulk order discounts
- Single item discounts up to certain percentage
- Free stuff if a minimum purchase requirement was met
When you offer discounts, make sure that you do not lose money. The key here is that you should mark up your prices high enough so that offering discounts will still make you a profit.
Create a Unique Experience
There are many ways you can do this. The first one is by making your shop comfortable enough so that the consumers do not get edgy.
Décor is another thing. If your physical store was made with fantastic interior design, you can expect that customers will love it and spread the word to their friends and families.
If you are operating a restaurant, you may want to consider a drive-thru service. This kind of service makes customers not wait in line with diners.
You can also introduce a pick-up service where a customer can place an order over the phone, and then he will just pick up the item and pay later on.
Many consumers like this because they do not like the hassle of picking the products themselves, or waiting while the products are being prepared and packed.
Create an Incentive Plan
You can do this for both your consumers and your staff members. If you are operating a store where the staff has to make a sale, then giving them a commission is a great way to boost your sales.
You see, the staff will be much more motivated to provide high-level of service if they have a commission. They will do what they can to convince a customer to buy, knowing that the sale of the product will give them extra money on top of their salaries.
As far as the customers are concerned, you can also give them an incentive if they are loyal. You can create loyalty cards where they can receive free items or huge discounts if they meet some requirements.
In the card, you can place a sticker on every visit, for as long as the purchase of the visit meets a certain price. You can give a big discount or a free item on the fifth visit, tenth visit, and so on.
This strategy is works because you are forcing the customer to come back and get that discount or free time.
And if he does, you are moving your inventory. You get repeat sales, plus this customer might tag a friend along if the product is great.
If a friend comes with home, then you get extra sales from that friend, and then you can give a loyalty card to that friend.
Is a Brick & Mortar Store Right For You?
This question is a difficult one to answer. The best thing we can do is to set some guidelines to help you decide if a brick and mortar store is the best kind of business for you to manage.
The brick and mortar store is a great choice for you if:
- You have a huge capital that you can risk on the business
- You are willing to lose money on inventory that did not sell
- You already have an experience in the business, even if not at a managerial capacity.
- You have a product that is best sold on a physical location
- You know how to manage people and processes
A brick and mortar store is not the best choice for you if:
- You have no capital
- You do not like or you do not know how to manage people
- You are afraid of losing money on products that do not sell
- You have never been employed before and you do not know how things work in your industry
- You have no special product to offer that will set your brand apart
A brick and mortar store is a huge accomplishment. Many people can only dream about putting up one. If you do not have a lot of capital, you can ask your friends and family to invest in you.
But of course, if the business fails, you might end up having a damaged relationship with the people whose money you lost.
Unlike an online store, a physical store requires more planning. It is also much more expensive to build because you will need engineers, architects, and interior designers.
Think carefully before you build a physical store. If you can, rent a small place and see how the market would react.
Test the product if there will be a demand, and learn from your mistakes as you go along. Building a big one right away if you do not have an experience yet will just increase the likelihood of failing.
Think before you act, and plan very well, even if it takes years.