The way we shop has come a long way in recent years, especially with the rise of e-commerce. While online shopping is more mainstream, the demand for in-person shopping hasn’t quit. Whether you’re a business owner trying to decide if you should open up an online store or a physical storefront, you’ll find valuable insights within this article for the advantages and disadvantages of each. Join us as we compare and contrast the two, and explore their benefits and challenges. Let’s get started.
Pros of E-commerce Stores
- You’re open 24/7
With a traditional brick-and-mortar store, you have set hours of operation. You likely stay open during peak business hours. However, outside these hours, you may lose out on a pool of customers. When you offer an online store to customers, you’re essentially open for sales at any point in the day. As long as your audience has an internet connection and your website is up and running, you make purchases through your business even more accessible for customers.
- Bigger market pools
Without an e-commerce website, customers from other parts of the world can’t shop with you. When your store solely operates through a physical storefront, you’re limited to the customers willing to make the trek to you. However, with a digital store, you can offer global shipping, allowing customers to shop with you no matter where they are. Without the limitations of a physical location, you drastically expand your pool of customers. Additionally, employing social media allows your customers easily find you online and quickly become their new favorite store.
- Lower overhead costs
When compared to physical locations, e-commerce businesses typically have lower overhead costs. With e-commerce, you cut out the need for a physical storefront, so you don’t have to pay rent or utilities to keep your store running. E-commerce stores also require fewer safeguards to protect your business. For example, with a physical location, you need to invest in business insurance to protect your business in case of an accident. These insurances range from business income, general liability, commercial property insurance, and more. The cost of insuring an e-commerce business is much lower than insuring a physical storefront, but e-commerce business insurance remains a wise investment.
- Easier to get your products into physical stores
When your company has an online store, you cut out the need to pitch your products to physical storefronts, at least in the beginning. It’s difficult to get a new product out on the market, especially if you can’t prove its demand. However, by selling your products through your e-commerce store, you can easily prove the success of your new products. With observable data on the performance of your products, you make it easier to craft a successful wholesale pitch should you wish to see your products in physical stores.
Pros of Physical storefronts
- Personal interaction
An e-commerce store can’t replace the human interaction that takes place in physical storefronts. The benefit of brick-and-mortar stores is your trained employees who can easily answer customer inquiries and build connections with customers. These interactions work to build trust and loyalty between your brand and its customers, fostering long-lasting relationships and loyal customers.
- Immediate purchase fulfillment
Sometimes when customers make a purchase, they don’t have time to wait for shipping, even if they pay to expedite it. This is one advantage of a physical storefront over a solely digital business. Immediate gratification also plays a role in shopping behavior. When customers purchase and receive their tangible goods immediately, dopamine and other happy hormones flood the brain, which is where the idea of retail therapy comes from. While shopping online allows customers to make purchases instantly, it can’t replace the immediate gratification that comes with in-person shopping.
- Better shopping experience
When shopping online, customers aren’t able to touch and use an item before purchasing it. This leaves a lot of guesswork for the customer to determine whether they’re making the right purchase. The benefit of a physical store is that customers can inquire about an item before purchasing it. This is especially important for certain retailers that sell clothing or expensive tech.
Cons of E-commerce Stores
- Limited customer interaction
While personal interaction is one advantage for physical storefronts, unfortunately, this is a luxury e-commerce stores miss out on. While technology such as chatbots works to combat this disadvantage, nothing can replace authentic human interaction, which is essential to building trust and loyalty with customers.
- Shipping costs
The wait for shipping and processing is another disadvantage of operating an e-commerce business. Many customers may prefer to make purchases in person rather than online, especially for goods like clothing. Other times, customers may need an item immediately and not be able to wait for shipping, which means you’re losing out on a pool of customers.
- Higher return rates
Due to the lacking tactile experience in e-commerce stores, they may experience a high rate of returned products when compared to a physical location. Without the ability to try on and test products, customers may make purchases knowing they might be returned.
Cons of physical storefronts
- Limited hours of operation
When shopping online, customers aren’t able to touch and use an item before purchasing it. This leaves a lot of guesswork for the customer to determine whether they’re making the right purchase. The benefit of a physical store is that customers can inquire about an item before purchasing it. This is especially important for certain retailers that sell clothing or expensive tech.
- Higher overhead costs
With a physical store, there are many more expenses when compared to an e-commerce store. The expenses include rent, utilities, staffing expenses, and more. While e-commerce stores also have expenses to keep their business running, operating a physical storefront adds many more.
- Geographical limitations
As mentioned above, e-commerce stores have the advantage of being open to customers around the world. However, physical storefronts limit your customer base to those in your local area. If there’s no demand in the area for the kinds of products you sell or customers have to travel far to reach you, this quickly spells trouble for your business.
In conclusion
While both e-commerce stores and physical storefronts both have their advantages and disadvantages, it is up to you to choose what’s right for your business. Whatever you decide will depend on the needs and goals of your business, as well as careful research into customer preferences. Whether you choose to operate both an e-commerce and physical store, or one over another, making the right choice can help open you up to a broader market and provide your customers with various ways to shop.
Megan Isola
Megan Isola holds a Bachelor of Science in Hospitality and a minor in Business Marketing from Cal State University Chico. She enjoys going to concerts, trying new restaurants, and hanging out with friends.
