Local Business > Merchant Voice

Ecommerce expanding into brick-and-mortar

When I first started in ecommerce, it was as a way of expanding my brick-and-mortar business as a second sales channel. I was not the only one. It seemed to many that this was the way to go for most independent shops. These days I cannot see how an independent shop can survive without an Internet sales side. It not only gives the brick-and-mortar staff things to do in between customers, it also increases turnover and buying power.

Fast-forward twenty years, and most of my business is now mail order from my ecommerce site. The physical shop is just an added bonus. Having a physical storefront adds to credibility and can get us accounts with some suppliers who refuse to supply Internet-only retailers.

These days, instead of hearing about brick-and-mortar shops going on the internet, the current trend is for Internet-only retailers opening a shop. Time and again I see postings on forums from hopefuls either just looking for a property or who have opened up one and are finding out the problems the hard way.

Now for a brick-and-mortar business to expand into ecommerce, the risks are not that great, and the potential gains far exceeding the risks. This is not to say that it is easy. Indeed I expect that most initial attempts fail — the web effort never really takes off. I have seen some really hideous websites. But web failures rarely threaten an established brick-and-mortar business.

The move the other way is far more risky. From the postings I have seen, Internet-only retailers seem to have a rosy vision about brick-and-mortar retailing and think it is easy. In fact not only is it completely different, it is also far more risky.

First there is the commitment. A physical shop needs staff to be on the floor every minute the shop is open. There is no popping off for 10 minutes to get the milk, no going out to pick up the kids from school, no sudden rush to school because there is a small problem. You suddenly lose all your freedom. On an ecommerce business, your only deadline was the mail pickup, and you could set your own schedule. Now you have to be there all the hours the shop is open. There can be nothing more damaging to a new shop than a potential customer turning up only to see it closed with a sign “back in 10 minutes.” The only way to overcome this is to either have more staff to cover, or commit more of your own time.

Secondly, you simply cannot do as much on the shop floor. Indeed when there are customers in the shop you have to pay attention to them and not all the other work you were hoping to do. Further customers coming in interrupt you. You might be in full flow doing something “important” when a customer enters and you have to drop everything. At this point one of the hardest, but vital things to do, is to smile and welcome them. Give them your whole attention even if you so need to finish whatever you were doing.

Thirdly, physical shops do not run themselves. Customers, bless them, move things around, make a mess, and generally need tiding up afterwards. Merchandise needs displaying, not just dumped on a warehouse self. Products need to be priced, and most important of all, everything needs dusted regularly.

It is all too easy to underestimate the amount of work involved in a shop, and how less mail order can be done as a result.

The trouble is that all the above are the less risky problems. They may still trip you over, but are not really business threatening. The major problems arise when you consider the property.

Shops cost far more to rent than warehouses. This is not only because they have to be in good locations, but also because you need more space to display the stock. Landlords also require commitment. So you are likely to be tied into a lease or agreement that lasts years.

Shops also cost a fortune in electricity to light and heat. You cannot get away with warehouse lighting and heating. You need a comfortable environment that is warm and well lit. With spotlights to highlight featured products. These lights need to be on 10 hours a day minimum, 6 days a week. It adds up fast.

There are countless other overhead costs, like a card processing machine, a cash register, a telephone line, carrier bags, waste disposal, and more. Many of these require you to sign up for a year or more.

Moving into the brick-and-mortar environment means signing up your business to a significant number of overheads, many of which with years of liability, not just the month-by-month fees that an Internet only business has. This is a steep change in your business. Get it wrong, overestimate the amount of sales you make in the physical shop, and you could find your new venture destroying your existing business.

It is therefor vital that you do your research properly. Do detailed business plans, have contingency plans, and look into every aspect. Most of all, think twice. Do you really need the risk and hassle? Done properly it can be the best move you make. It can bring customers to you that you would never have online. It is always far more rewarding to actually see and speak to your customers — to learn from them. It can move your business in directions you would never have considered.

Done poorly, it could break you.

Richard Stubbings
Richard Stubbings
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