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eCommerce VS Brick and Mortar

If you’ve considered starting a business, then you’ve probably wondered if you should start as a website, then maybe a physical storefront, or maybe you wanted to rent that vacant building down the street.

Which is best for you will depend on many different factors, some of which are specific to you alone. A website may not be the best choice for you, and I hope to explore some of the pros and cons of each that you may have missed.

The first thing I want to address is the thought that a website means easy money. More and more, people are turning to the internet to start their businesses, and in my experience, it takes at least a year to turn profitable, unless you’re amazing at marketing, or have a viral product.

eCommerce Stores

Starting a successful website is difficult. I’ve mentioned this a number of times including my article titled Easy Money: Don’t Believe The Hype.

Starting an online store is more than setting up a pretty website, and providing great service. Now, you have to be involved with social media such as Facebook, Twitter, and Google Plus (Google+).

In addition to that, you have to be good at search engine marketing, or hire someone to do it for you. Let’s face it, the days of typing URLs into an address bar are quickly coming to an end. More people surf the internet using search engines than ever before.

So, a website owner’s checklist went from:

  1. Setting up a pretty website
  2. Providing excellent service

and turned into:

  1. Setting up a pretty website
  2. Setting up social profiles on Facebook, Twitter, Google+, etc.
  3. Marketing on those social networks consistently.
  4. Placing in Google Search Results.
  5. Securing the site against hackers.
  6. Providing better service than the hundreds of other competitors.
  7. Competing with constantly changing prices, and your customers’ ability to compare many prices with little effort.
  8. Trying to build a reputable name in a world of billions of websites.

Many of the things on that list can be full-time endeavors just by themselves. The problem is that it is very hard to ignore any of those steps. Ignoring social media, or price competition can end up in massive amounts of lost sales. You need to strike a balance.

It is no coincidence that I know multiple people whose primary source of sales comes from Twitter and Facebook. Social media is now important to online businesses.

Brick-and-Mortar Stores

Physical locations (aka brick and mortars) have many distinct advantages, but they also come with a truckload of disadvantages. Let’s start with advantages:

  1. Fewer immediate competitors if you choose location well.
  2. Drive-by visibility.
  3. Near immediate legitimacy.
  4. Local market share.
  5. Less price competition.
  6. Potential captive customers.

I’m sure there are more that I missed, but those are excellent advantages to having a physical store. By having a physical location that people can see, and enter, you establish immediate legitimacy, you have visibility to anyone driving by, you may have potentially captive customers who don’t want to drive to your nearest competitor, and you have less competition price-wise.

Some disadvantages are:

  1. You have substantially increased overhead (Rent, Utilities, Etc.)
  2. You have a decreased customer base.
  3. Store hours, rather than open 24/7
  4. More expensive marketing to a local market.

If you are at all hesitant about your ability to market online, your technical expertise, or the costs to hire someone with the skills you need, then a brick-and-mortar may be the best option for you.

It will be more expensive (in nearly all instances) to operate your store, but you’ll also be playing to your strengths. Online business seems easy, but that is deceptive at best. It is an ongoing education, and a constant pounding of the pavement to make sure your customers still see you.

Hybrid Model

Most businesses offer a hybrid model. If you are considering starting a brick-and-mortar, then it just makes sense to have a website because of how cheap it is.

However, if you plan on operating online primarily, it would not make sense to start a brick-and-mortar, unless you’re absolutely positive that you must, or that you think it will be profitable.

The only other time I could suggest an online store starting a brick-and-mortar for the sake of being a hybrid is if you have to rent a place to produce your product. If you’ll already be paying a rent, then it makes sense to attempt monetizing your production facility.

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