The pros and cons of each, and five reasons to have both
When the first lockdowns hit in 2020, many small retailers who’d only ever existed as bricks and mortar shops started selling online for the first time.
eCommerce has been growing in New Zealand and around the world for years, but with the sudden restrictions on face-to-face trading, both the number of eCommerce stores and total eCommerce sales volume skyrocketed.
With online transactions up by 17% since 2019 and commercial rent remaining high in city centres, many retailers have been left wondering if it’s better to seize the opportunity to go all-in online.
Let’s look at the pros and cons of remaining in a bricks and mortar location, versus online only, and why you’re ultimately better off with both.
The pros and cons of bricks and mortar
Despite warnings that high street shopping is dead, bricks and mortar shops are not going away anytime soon.
While 11% of all retail sales in New Zealand are now online – a number that is slowly increasing each year – almost 90% of retail sales still happen in a physical store.
The benefits of bricks and mortar include:
- Customers have the opportunity to try before they buy, with the support of sales staff who can answer questions, up-sell or cross-sell.
- Customers can have their item immediately, without waiting for shipping (or paying extra for it) – a key issue for many shoppers.
- Many customers still prefer to make purchases in-person (even if they do their research online) or engage in shopping as a social activity with friends.
The costs are:
- High rent, electricity, insurance, staff wages and other overheads
- The amount of stock you keep on hand is limited by the size of your store
- Location is key – if you’re not in a good spot it can be difficult to attract customers
The pros and cons of an eCommerce-only approach
In light of Covid-19, many small retailers are looking to eCommerce as a safety measure to protect against future lockdowns, ensuring they can remain in business even if they cannot open their physical shop.
Customers expect their favourite store to have a digital presence, whether in the form of a full eCommerce offering or simply a brochure website to provide key contact details.
The benefits of eCommerce:
- It’s open 24/7 and can be largely automated, reducing the number of staff needed to operate.
- Customers can compare product specs and browse reviews, completing most of their research autonomously and at their own convenience – no need for parking or transit to a physical store.
- Retailers can stock a larger range of products, sizes, and colours than they could keep in their physical shop.
- Retailers can reach a wider geographic audience – nearly a third of Kiwi retailers said their growth in 2020 came from new overseas customers.
The downsides of eCommerce:
- The online space is crowded, making it hard to be found unless you invest in ongoing marketing.
- Customers have high expectations for website security and experience, especially on mobile. A poor web experience can harm your sales.
- Deliveries are a big issue for shoppers, with 39% of people reporting their key frustration with online shopping being delivery taking too long, while 15% reported that returning products was not easy enough.
Five reasons you really need both
In today’s digital world, it’s vital for bricks and mortar stores to have an online presence and gain the advantage of eCommerce, but should they give up their physical location in favour of an online only approach?
According to a recent NZ post report, 55% of online retailers found that their revenue was higher in 2020 than the year before, but where it gets interesting is that number rises to over 60% when you look at retailers who have both an online and a physical store.
The retailers who were catering to both online and in-person shopping were more likely to increase their revenue than those who sold solely online.
There are multiple benefits to having both a bricks and mortar store and an eCommerce shop front, here are five reasons why they make a winning combination:
- Serve your customer’s needs at different stages of the journey – many modern customer journeys utilise a combination of online and in-person experiences. They may start their research online, comparing specs and finding a location to visit, before visiting a store to try something on or ask staff for advice, and then finally complete a purchase online if the store doesn’t have the specific size or colour they’re looking for.
- Make shipping and returns options easier – provide online customers with the option to pick up in store or have it delivered, and the same option for returns to remove some of the hassle. Shipping delays were one of the main issues identified with online shopping in New Zealand, so offering in-store pickups and returns can be a persuasive selling point for your customers.
- You don’t have all your eggs in one basket – if there’s a lockdown or a physical disaster (like a fire or flood), the eCommerce side of your business can continue operating. Similarly, if there’s an issue with your online store in the form of malware or a virus, you can continue selling from your physical location.
- Having a physical location builds trust for online shoppers – digital consumers are becoming more savvy to scams, especially from international online-only businesses. Having a physical address can help to build trust and provide assurance that your business is legitimate and can be contacted (and held accountable) if an issue arises.
- Having both an online shop and a physical location increases your exposure – nearly one third of all mobile searches are related to location, with users looking for specific businesses “near me”. When you list your bricks and mortar shop on Google, you’re likely to appear in these local search listings, which can help new customers to discover both your physical and digital stores.