The most surprising new avenue for online businesses might be brick and mortar. It may seem like a contradiction in terms, but from Amazon to Warby Parker, a growing number of online businesses are expanding into physical locations. What’s behind this move? What are the pros and cons of opening the doors to a physical store?
While a number of thriving internet-based companies like Birchbox and Bonobos are purchasing real estate in trendy areas, it’s important to note that none of them is leaving online behind. Instead, a storefront is just one part of a strategy that’s all about building a name, branching out and being a little bit different.
Building a store — and a brand
As the online marketplace grows increasingly crowded, it can be difficult for one shop’s signal to be heard above the noise. A storefront and a sign on a pedestrian-friendly thoroughfare become automatic advertising, of course, but there are other benefits as well.
For online shoppers browsing sites on their laptops or scrolling through their phones, most websites can “feel” the same. When consumers step inside an actual store, a business has a thousand small ways to cement and differentiate a brand identity, from the staff to the lighting to the music playing in the background.
A walk-in space allows a company to offer not just products but experiences — even group outings. For instance, Adagio Teas — which began in 1999 as an online tea retailer and opened its first physical store in 2009 — hosts regular themed tea tastings from its Chicago locations. These events expose customers firsthand to Adagio’s products while also generating word-of-mouth buzz and positioning the company as an authority on gourmet tea.
Another benefit to brick and mortar: There are some items shoppers would rather see in person before reaching for their wallets. For instance, it can be hard to get a feel for a high-value garment or piece of jewelry just by looking at a thumbnail photo. A recent piece in the Guardian reported that menswear provider Bonobos finds that its average order size is twice as large when customers shop at a physical location.
This is, of course, especially true for products that offer some sort of tactile appeal — soft fabrics, soothing skincare solutions or anything that involves food. It’s the difference between reading a description of a burger cooking or smelling the smoke and hearing the sizzle.
Adagio allows visitors to smell and even sample any of its wares; the store also includes a tea bar, where customers can order a full-size cup, hot or iced. The company doesn’t see itself as a traditional cafe or restaurant. The goal is not to make money selling brewed tea but to leave consumers thirsty for more — and willing to take home a new bag of loose-leaf.
Trying something new
Real estate can be a risky investment — landlords generally want a substantial commitment, and the costs of commercial rent can be considerable, especially in high-traffic areas. However, a business that gets its start online has some advantages over a brick-and-mortar store that’s starting from scratch.
For one thing, a successful e-commerce company already knows plenty about its customers. What are the popular selling items? What items do shoppers tend to buy together? Do customers cluster in certain geographic areas? This built-in research can be invaluable.
For another thing, as Eric Alper, senior vice president of marketing at Frank & Oak explained in an interview with Slate, online businesses are already used to thinking outside the box. Alper argues: “I think our advantage over older retailers is that we don’t have legacy systems … as a startup you have no systems, but you can create them and embrace modern technology.”
Creating a business model from the ground up gives an online company tremendous freedom to experiment. Warby Parker, the stylish glasses frame merchants, first tested the brick-and-mortar waters with temporary pop-up shops. And instead of devising a dramatically different stocking system to meet the logistical demands of a full-on store, Bonobos creates “guideshops”: essentially showrooms where customers try on clothes but still place their orders online via in-store computers.
Keeping brick and mortar in mind
Does the future of online include an offline component? It may be too early to tell. If business is booming and your brand would benefit from a physical space, if your products appeal to the senses and you have a strategy for meeting the logistics challenges, it’s certainly something to consider.
Set up shop
Not ready to commit to a permanent brick-and-mortar location? Test the waters with a pop-up shop. You’ll reach a different market, build your customer base and boost your bottom line.