Online Sales vs Retail Sales: Should You Sell Online?
Are you the owner or manager of a brick and mortar store who is thinking of expanding into online sales as a way to make more money? Or are you considering starting an ecommerce website as a new business, and aren’t sure if online sales will make you more money than retail?
Regardless of the reason you’ve ended up on this page, it’s clear you have some questions about online and retail sales, and the advantages and disadvantages of each. At WebFX, we've learned the ins and outs of how to make more sales online, and we want to pass that knowledge onto you. So we’ll answer some questions, compare and contrast online and retail stores, and let you form your own opinions about online sales vs retail sales.
We’ll start by learning a little more about how the buying process has changed over the last few years, and how the rise of ecommerce websites has made an impact on retail stores.
The Evolution of the Consumer Buying Process
Thanks to the availability of the Internet, and options like price comparison tools, discount coupon websites, and online review sites, the consumer purchasing process has evolved. Years ago, buying decisions were made based mostly on price, word-of-mouth feedback, and advertising — and they all took place in stores. Now, a consumer can be influenced by a variety of other factors, and may make buying decisions without ever setting foot in a physical store.
When a consumer is considering a large purchase, their buying process may not take much longer than it did years ago, but it is far more complicated. Someone who is in the market for a new TV might start by visiting a store, but ultimately make his or her purchase online after reading reviews, comparing prices, talking to friends, visiting different websites, and more.
While consumer reliance on online information doesn’t necessarily diminish the importance of retail outlets — especially those selling items that really have to be seen or experienced prior to purchase, like clothing — it does lead many retailers to wonder, “Should I sell online?” After all, if consumers are visiting the store first, would it be best to try to keep them in the same store for the end of their buying process? Or is it better to make more sales online than in the brick and mortar store?
While this may be a good idea for some retailers, it’s not necessarily best for everyone. Let’s explore this topic in a little more detail.
How Retail and Ecommerce Influence Each Other
As we’ve already shown, the presence of an item in a retail store can lead to a purchase from an ecommerce website. However, this is just one possibility, and it’s not always the most common. When and where the consumer makes their purchase can depend on a variety of factors, including:
- Convenience – is there free shipping online? Is the store far away from their house?
- Urgency – do they need the item right away?
- Price – can they save a little bit by buying online with a coupon code, or bundling with another order containing additional items?
- Availability – does the retail store actually have the item in stock?
- Condition – is the item in the store newer, fresher, or in better condition than what is available online? Would an online purchase potentially degrade the item’s condition?
- Experience – can the item be fully experienced, tested, tried on, or visualized online?
These factors may all impact a purchase, or only one or two of them may come into play.
As you might guess, any time a consumer is considering making a purchase, they’re probably going to very quickly consider these factors before deciding where to buy an item. For example, a consumer who quickly needs a new coat may see that it’s in stock online and in his or her local store, but they may choose to buy in the store because they want to try it on first... even if it is just a little more expensive.
Ecommerce websites can drive visitors to retail stores in the same way retail stores can drive shoppers online. It all depends on these factors, some of which may be entirely out of your control. But if you are determined to be the person from which the purchase is made, you’ll have to do your best to be conveniently located, reasonably priced, and well-stocked... or have both an online and offline storefront.
Should Brick and Mortar Retailers Open Ecommerce Websites?
Let’s say you run a brick and mortar store, but you have limited operating hours. You may think that because of this, you are losing business to similar online retailers. You are thinking about opening an ecommerce website to sell your products online, enabling customers to browse your merchandise and make purchases whenever they want.
While it’s definitely good to see that you’re thinking of ways to keep your customers happy, this may not necessarily be what they want. What if your customers just want you to stay open an extra hour each day so they can visit your store after work? Or what if they would be satisfied with reduced weekday hours in exchange for a longer weekend schedule? In this situation, opening an ecommerce website may not actually help your business succeed.
If you already run a physical location, you should be aware of the unique demands that go along with operating an online store, including:
- Making room for inventory
- Keeping track of stock, and when to reorder items that have run low
- Shipping products on schedule
- Paying shipping fees
- Paying monthly or yearly website hosting, domain registration, and other online services fees
- Paying ongoing checkout or payment gateway fees (so that you can accept payments online)
- Keeping the content on your website up-to-date and abiding by Google’s standards
- Maintaining your online presence (ex. social media pages, monitoring for new reviews, answering customer inquiries via email, updating your blog, etc.)
- Following security standards to keep customer data and payment information safe
Running both a physical location and an online one can be very demanding. It’s unfortunately not always realistic to run an ecommerce website “in your spare time,” even if you only sell a handful of products. There’s a lot to keep up with.
There are advantages of having an online storefront, however, even if you already sell in a physical store.
The Advantages of Selling Online
The biggest advantage of operating an ecommerce website is the convenience factor. From a consumer standpoint, it’s extremely convenient to visit a website, place an order, and simply wait for the package to show up a few days later. If you make the ordering process very easy for your visitors, and what you sell is desirable, that’s going to be a big benefit to your business.
Additionally, if you don’t already have a physical location, and you’re trying to decide between brick and mortar and ecommerce, you may choose to sell online simply because the barrier to entry is much lower. You don’t need to purchase a storefront, pay rent, or set up window displays. Many small business owners with ecommerce websites operate right out of their home, storing merchandise in a basement or spare room and driving it to a post office or shipping store when there’s a new order.
While there are certainly some costs associated with selling products online—you still must register your business, pay taxes, and abide by any laws regarding the operation of a business in your state—they also tend to be lower. Rent and space is an obvious one, but you’ll also save on employee costs (there’s no physical store to staff), equipment (no cash register or card reader will be needed), and displays (no shelves, mannequins, or planograms to speak of).
The biggest investments you’ll need to make in your online store will likely be in the form of customer service—having someone to answer emails or even phone calls, if you offer this option—and marketing.
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The Importance of Marketing
When you’re trying to promote a physical storefront, most of what you do is probably also physical—that is, done in real life. You might hang a sign above your store, place an ad in a local magazine or newspaper, or even take out space on a billboard by a well-traveled highway.
Marketing is just as important for online stores as it is for offline ones. Without online marketing, like email campaigns, content marketing, social media, and pay-per-click (PPC) advertising, people may never know that your storefront exists.
However, because there is so much competition, both online and off, it’s becoming increasingly hard to get noticed. Simply making a flyer, or posting on your social media pages, won’t drive more people to your store. However, consistently offering great service, creating helpful content that answers questions, and doing your best to meet the factors we listed earlier will, bit by bit, drive more traffic to your site or physical location.
Online Sales vs Retail Sales: Where Will You Make the Most Money?
So will having a brick and mortar store bring you more success and revenue than an ecommerce one, or is online-only the way to go? Or is it worth exploring both options, either permanently or with the assumption that you’ll try both and only keep the one that works best?
Although you may not think this, there is one common component that will ultimately determine whether or not your storefront will be successful: visibility. For both physical and online stores, how visible you are to your potential customers is what determines how much money you make, how many repeat customers you gain, and what happens to your business in the long run.
Offline visibility is about more than your location, although it’s true that being squeezed into a row of tiny shops with no sign will probably not get many customers in the door. Being visible also means doing some form of advertising, like commercials, direct mail, or even a billboard or two.
However, offline visibility also means doing some online marketing—yes, even if the only thing you have is a brick and mortar store. If you don’t have a website, or at the very least a business listing on Google, it will be next to impossible for customers searching for information online to find you. That’s what visibility is all about: making it easy for people to find you when they’re actively searching for you.
For ecommerce websites, online marketing is much more important, because offline advertising—while certainly still possible—is typically not a favored option. This means that visibility to potential customers has to be achieved almost solely through search engines, specifically through pay-per-click advertising and search engine optimization (SEO).
If an online business does not appear in search engine results, and as high on the page as possible, it will be very difficult for them to attract new customers. Because most people searching online tend to click on the first few results, and very rarely visit the second page (or beyond), ranking highly with SEO or being more visible via PPC ads is extremely important.
How much money you make online or offline, and which method is more profitable for you, will depend on a variety of factors. However, your visibility will determine whether or not you are able to successfully transition from a brick and mortar store to an online one. If you do not make yourself just as visible online as you were offline, you will probably not be very profitable.
Thinking About Starting an Online Store?
Whether or not you already have a physical location, if you are thinking about starting an ecommerce website, it is important to know all the requirements of operating an online store, and to have some idea of how you will operate your business efficiently. Here is some additional reading from WebFX that may help you learn more about ecommerce:
- Ecommerce Startup Guide – This guide will walk you through setting up an online store from start to finish, including selecting a platform, finding a payment gateway, setting up your products, and establishing a marketing plan.
- Ecommerce Marketing Plan Template – This template will give you everything you need to create your own custom marketing plan for your online store, ensuring that your site is in perfect shape for years to come.
- Ecommerce SEO – Learn the tips and tricks to properly optimize your online store for search engine success.
- KPIs for Ecommerce – Are you measuring the right key performance indicators (KPIs) for your store? This article helps you find out which KPIs are the most important ones to track online.
Additionally, if you would like to learn more about the ecommerce services we offer, including website design and development, you can visit our ecommerce page. We offer a full list of packages, pricing, and plans suited for businesses of every size, whether you’re new to selling online or are an experienced business owner.
Want to learn more about how WebFX can increase your online and offline sales? Call 888.449.3239 or contact us online today to find out how we help businesses like yours get more from the web with Internet marketing.