Online Entrepreneurs

The US is still riding the wave of entrepreneurship. According to recent data released by the Census Bureau, new businesses are continuing to open at a rate much higher than pre-pandemic average. 

The pandemic opened the door for many new businesses and business trends, including remote work allowing for more interstate migration, and a different approach to work and entrepreneurship. 

With more options available, business owners and aspiring entrepreneurs can make use of these recent changes by opening a business in one of the top rated and fastest growing states like Idaho, or opting to open a business in one of the biggest economies in the world, mammoth economies like California or Texas. But one may wonder, does your business even need a physical location at all? The increasing prevalence of online shopping makes this a hotter debate than ever.

Why opt for a physical location for your business?

For decades, the norm for entrepreneurs ready to launch their business was to find a storefront. Heavy foot traffic, easy parking and easy access were the main criteria for determining where to set up shop.

That all changed with the commercialization of the internet. Today, businesses frequently choose to be online first or only. A digital storefront has several advantages over a brick-and-mortar location.

Why are people opting for a virtual business first? Let’s take a look at some of the main reasons.

Always Available

With an online storefront, you never have to worry about whether customers will find you when you’re open. An online store is always available, irrespective of time zones, weather conditions or driving conditions. With the click of a mouse, customers can access your store and shop for items they need.

With a brick-and-mortar store, you’re limited in most cases to working hours. With an online presence, you don’t have to schedule and pay workers and can be available to customers no matter where they are, what time it is or what device they’re using.

Increased Brand Recognition

Size doesn’t matter much when it comes to online businesses. Even small- and medium-sized businesses can grow a large base of customers with a good online presence. You can access shoppers across the world, well beyond the reach of a local brick-and-mortar shop.

Search engine optimization (SEO) is key to any online business. By using various techniques, including blogs and high-value online content, you can ensure that your site ranks high in search engine results. With a strong online presence, compelling products or services, and great customer experiences, you can build a large presence worldwide.

Scalable Expansion

When you have an online presence, scaling is far easier than with a brick-and-mortar store. Adding new products or services, expanding to new demographics and positioning within the market are all far easier to do online.

Contrast the work of adding new messaging and pages to a site with the complexities of real-world growth. You need to find and pay for new locations, hire and staff new locations and manage multiple venues. The costs and time necessary are considerable.

Improved Customer Engagement

An online presence provides new ways to connect with customers. You can create additional touch points that draw customers to your site again and again. Touchpoints can include new products, new content and ways to bring customers back to your website, such as promotions, coupons, sneak peeks, newsletters and high-value items.

Cost Savings

With a website, you will need to pay for website development and maintenance. However, these costs pale in comparison to the costs of running a brick-and-mortar shop. There’s the need for salaries, wages, benefits and taxes for your employees. You also will pay more for insurance coverage, rent, utilities, permits and licenses. These costs add up considerably and eat into your bottom line.

Time Savings

With an online storefront, you will save your customers time with helpful search functions, intuitive access to products and ease of checkouts. Customers will appreciate how quickly they complete a transaction, without the frustrations of finding parking, navigating aisles and having trouble finding what they need.

Pros and Cons of Online vs. Brick-and-Mortar Stores

Let’s take a closer look at the pros and cons of different aspects of shopping in a physical location versus an online presence.

Location

Pros of online stores:

With an online store, customers have the convenience to shop whenever they want. Online stores can provide pictures and videos of their products and show customers how to use items.

With an online store, your marketplace is the world and shoppers will not have to travel anywhere to visit the stores they want.

Cons of online stores:

The biggest con of location is that online retailers incur some costs that in-person stores do not. Online stores need to ship purchased items to customers, pay more for packaging and pay for inventory storage whereas in-person stores can place objects on shelves.

Touch is one of the primary benefits of a brick-and-mortar store. Customers can pick up and hold items before they buy. The physical sensations can be a powerful sales driver as customers can not only touch but see, feel and smell items. They typically come with storage rooms to hold excess inventory.

Customers can also usually take their items with them instantly, without having to wait for items to be packed and shipped.

The biggest con to an in-person shop is that your clientele is limited to those who can physically go to the location and shop there.

Transactions

Typically, transactions can be handled the same way in brick-and-mortar locations as online with one notable exception. Both channels usually accept credit cards, debit cards, mobile payment apps and gift cards. The one exception, which is an advantage for brick-and-mortar stores, is cash. In an online space, cash cannot be used to complete transactions. However, it is readily accepted at in-person stores.

Marketing

Some aspects of marketing are the same for both channels. Certainly, the need for awareness is the same and can be done using marketing approaches and advertising via print, television and radio. Both in-person and online stores can also leverage social media and digital advertising to drive customers to stores.

To reach a global audience, the costs of digital advertising can be expensive for online stores. The same goes for ongoing broadcast and print campaigns, which can take time and money to be effective.

Customer Engagement

To be successful, businesses need to build relationships with their customers. That’s done in different ways, depending on the channel. Online, those relationships need to be a little more creative, taking place over social media, texts and other communications. Today, businesses can better personalize these interactions to forge connections.

In-person businesses have the advantage of live interactions with customers. While the online options are also available to them, businesses can also build face-to-face relationships with their customers through conversations and interactions.

The advantages in cost, marketing and reach make online storefronts a compelling option for many entrepreneurs. Starting a business online can be done quickly without the ongoing operating costs that can eat into the profits of a new business in a storefront.

Understanding the differences, pros and cons of online and brick-and-mortar stores allow business owners to make the right decision for their business.