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Plain Talk
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5 Reason To Go Brick-And-Mortar Over E-Commerce
by Rick Segel and Matthew Hudson Despite the rumored imminent demise of brick-and-mortar retail stores, the numbers tell a different story. U.S. e-commerce sales, including transactions made from mobile devices, totaled $63.4 billion in Q1 2014, according to comScore. But the Department of Commerce estimated total retail sales, including brick-and-mortar store transactions, to be $1.15 trillion in that same time period. In other words, e-commerce still only accounts for 6 percent of all U.S. retail sales, even though it has grown at an incredible rate over the past decade. The old brick-and-mortar store will remain a viable option for entrepreneurs for the foreseeable future. Here are five advantage of going physical over cyber: Location, Location, Location There are only two ways to find an Internet-based business: if its marketing team somehow reaches you via email or social media; or it displays it in search results. People drive and walk past brick-and-mortar stores every single day, amounting to 24/7 free marketing. The Pew Research Internet Project estimates nearly 60 percent of Americans own a smartphone. Steve Olenski, of Oracle Responsys and an influential social media strategist, suggested in a Forbes column that location-based advertising works in the favor of brick-and-mortar stores because smartphones are so prevalent. Mobile location data not only provides predictive analysis pertaining to consumer behavior, but also uses real-time data that delivers shoppers right to your store. A 2013 survey by the World Retail Congress found nearly 70 percent of business executives around the globe believe physical stores are the best tool for customer relations, engagement, and building trust. Another 55 percent said they planned to increase their international presence by building more stores to reach consumers directly. A good, high-traffic location comes at a premium price, however. Picking the right spot at the right price will ensure a healthy business for years to come. Credibility Customer iCare, a customer relationship management (CRM) solutions provider, said one of the most common consumer pet peeves is calling a customer service department only to get a representative in a foreign country who is reading scripted responses. A brick-and-mortar store gives customers a place to come and vent frustrations personally. It also provides the company an opportunity to immediately remedy the situation, and potentially retain a customer. A brick-and-mortar store also eliminates the chance of being ripped off by scam artists. Most people follow standard protocols to stay safe online while shopping, but even the most careful individuals are vulnerable to thieves who are getting smarter everyday. Impulse Spending Business consulting firm A.T. Kearney found in its 2013 Future of Stores study that U.S. and U.K. consumers spend 61 percent of their shopping time in brick-and-mortar stores. Moreover, 40 percent of consumers spent more than they originally planned in physical stores, versus only 25 percent of online shoppers. The more products you can put in front of a customer, the more they will buy. A brick-and-mortar store gives customers the opportunity to try things on and see them right before their eyes, which increases the chances of closing the sale. Eliminate Shipping Online retailers have the advantage of not having to charge sales tax in most jurisdictions. The Marketplace Fairness Act, which is currently being debated in the House of Representatives, could change all that if it gets through Congress. Still, consumers have to pay shipping fees which basically negate any cost savings. America has become somewhat of an instant gratification society which everybody wants everything right now. The customer who wants that big screen television or new tablet will gladly pay a few extra bucks to take it home tonight as opposed to waiting 7 to 10 business days for it to be delivered. Have Your Cake And Eat It Too Its extremely difficult for an Internet-based company to open a physical store once it is established as an online retailer. But the reverse is simple. A brick-and-mortar store supplemented by an online presence is the best position a company can possible be in for maximum profits. You have the best of both worlds and access to a much broader consumer base. All you need is a domain name, hosting, and a Paypal account and your business instantly becomes that much more viable.
Rick Segel & Matthew Hudson are retail experts and the authors of the book Signs Sell.
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