Expanding Your Retail Business: Online vs. Brick-and-Mortar Debate

10 MAR-APR 20

Recently a client of mine posed an interesting question. She asked “In order to expand my business would it be better to invest in the internet or open another location?” Clearly there are many areas to explore prior to making a final decision. But retailers who have a physical store already understand the facets involved in opening a location whether it’s the first or the tenth; they have a sort of “playbook” to help make that decision. So let’s look at the online opportunities.

Online Presence

In today’s world of retailing having some sort of online presence is an absolute imperative. I am referring to an informational site that tells your customers about your store hours of operation directions on how to find the store an overview of brands carried services offered upcoming events and perhaps even a blog to communicate with customers. Providing more information will also increase your chances of showing up in the organic (not the ads) section of Google. Most people – customers and merchants – will agree that at the very least every store of any consequence should have an informational website.

Advancing the Story

Should you wish to advance the story you might rationalize that it would be a great marketing ploy to add a shopping cart since 10% of all retail sales are done via e-commerce. On the surface this makes sense. After all you are exposing your products to the virtual universe. You might think it would be great to have a customer in Montana discover your store in Michigan. Great idea – or is it? There is much to consider before deciding if jumping into the online ocean will be a good financial move or one that will leave you fodder for the internet sharks.

Considerations

One of the first items of consider –

Competition Should Be Competition

Since about half of all web sales come from Amazon they are currently the gorilla in the room. Know that if you play the Amazon game the low price gets the “buy box” and then (of course) there are Amazon fees and the fact that a substantial amount of inventory dollars must be allocated to the Amazon warehouse. Also consider that if Amazon stores your inventory you will be charged for that as well.

Deciding Against Amazon

At this point perhaps you have decided that Amazon isn’t for you but you still want to offer your customers the opportunity to buy from your site. Competition however is still an issue. Consider the fact that you may very well be competing with your best brands which have all of the styles sizes and colors available. Some of them may be selling your same styles for less than you are charging or offering your customers perks that you might not even be aware of (but you will discover because your customers will tell you).

Handling Competitive Pressures and Costs

If you have decided that you can live with the competitive pressures can you handle the costs involved? First of all you must have the internal structure dedicated to maintaining the website keeping the inventory current hosting the site integration with the POS system potential data breaches dealing with customer emails and phone calls – and the list goes on. Next comes SEO or search engine optimization charges to promote your site which would include Google Adwords.

Ritchie Sayner

Business Expansion: What’s the Smartest Investment?

Ritchie Sayner

First of all you must have the internal structure dedicated…

Website Maintenance and Challenges

To maintaining the website keeping the inventory current hosting the site integration with the POS system potential data breaches dealing with customer emails and phone calls – and the list goes on. Next comes SEO or search engine optimization charges to promote your site which would include Google Adwords. Published in the March/April 2020 issue of Shoe Retailing Today Copyright © 2020 National Shoe Retailers Association Tucson AZ www.nsra.org. All rights reserved.

Online vs. Brick-and-Mortar Purchases

Consider also the fact that a minimum of 30% of online purchases are returned versus only 9% of brick-and-mortar store purchases. Will you offer same day delivery? Free shipping? Free return privileges? All represent additional costs and time.

The Case for Bricks-and-Mortar

It’s hard to build customer loyalty enjoy the interaction of good customer service and experience proper fit when the customer is sitting behind a computer ordering shoes in his or her bathrobe at midnight. Most good retailers will claim that they actually save the customer time by culling the vast assortment of available merchandise to only the best of the best. That is why they have buyers. They want to work with customers to understand their individual needs and wants and to ensure they receive the proper fit. Among the chief reasons to shop in a store are for advice service and expertise.

Ways to Make Online Selling Work

One retailer I spoke with is careful to buy only styles that are not being sold by the vendor directly to the customer. She also stays away from what the major stores are buying by specializing in a unique “one of a kind” approach. To do this the store may buy special materials and order different colors. This store has been able to greatly reduce the online return rate.

Personal Service Online

Rate by incorporating the personal service with online customers that they would receive if they were shopping in-store. One method of offering personal service online is by offering known size variances on the store’s website. Store managers can also go as far as asking sales associates to call online customers if they feel that a given customer does not understand the fit nuances of a particular shoe.

Cost-Effective Online Services

Depending on your size and set-up online services like that of Shopify or Bigcommerce might be a more cost-effective approach to internet selling.

Meet “BORIS”

Stores quickly got used to “BOPIS” or “buy online pick up in store.” Now they are adjusting to “BORIS” an acronym that stands for buy online return in store. Current data suggests that more than 50% of both fashion and footwear retailers offer BORIS service. Customers like it because they can avoid paying for return shipping and save time not to mention the added convenience of getting an immediate refund or exchange for another product.

Independent Retailers and BORIS

The independents I spoke with who offer the BORIS service prefer to do this only on exact styles that they currently carry except under extreme circumstances. Most independent retailers are not set up to take back styles that are not part of their assortment even if they carry the brand. This seems to make sense since no retailer should be expected to absorb individual pairs of styles the store doesn’t offer. They will however use the returns opportunity to interact with the customer and reiterate the reasons that the store should be considered initially for future purchases.

One retailer I spoke with actually gained a lifelong customer by taking back a defective shoe that a competitor wouldn’t accept. He did carry the line being returned but not the style in question. In fact he actually gave the customer a new pair of shoes. The customer was

So thankful she bought multiple pairs – and the retailer was able to return the defective shoe to the vendor. Sometimes things work out as we wish they would!

Whether you decide to open another location add a shopping cart to your website to increase online sales use an online service or simply to keep your site informational the main objective is to get the customer into the store! Once inside it is the experience enjoyed coupled with the service received that will keep the customer coming back.

• Ritchie Sayner is with Advanced Retail Strategies LLC an affiliate of merchandise planning company Management One.
• Sayner’s book Retail Revelations: Strategies for Improving Sales Margins and Turnover is available on Amazon.
• Contact him at advancedretailstrategies.com.

Ritchie Sayner

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