Why e-Commerce Retailers Should Consider Brick-and-Mortar Stores

Michelle Aran
Michelle Aran
Guest Contributor

Leading-edge digital native retailers are expanding into physical retail for a variety of reasons, and they’re reshaping the retail landscape along the way.

There is no question about it: e-commerce is huge.

In 2018, for example, it was estimated that 1.66 billion people made a purchase online. In the U.S. alone, these e-commerce transactions amounted to a staggering 2.3 trillion dollars.

The room for growth is truly remarkable too. As more and more people continue to get online around the world, these figures are expected to rapidly expand. This is a boon for small businesses, who can now advertise and sell their products to a global audience without ever having to open a brick-and-mortar store.

But that isn’t to say physical retail is dead, an unfortunate victim squished by the rise of e-commerce. In fact, many businesses are re-thinking the entire concept of retail stores and the future looks bright here too.

Innovation is pushing the potential of retail, and e-commerce companies should definitely give a physical location some serious thought. As we will see in this article, there is some serious potential and it could mean great things for their businesses. Here’s why.

Brand Awareness

Of course, one of the key benefits to having a retail store is brand awareness and visibility. Many e-commerce businesses will find that each day is a wrestle with SEO, ASO, and all other types of optimization. This is needed to rise to the top of a competitive market, but it’s quite risky and can be very expensive as well.

As we have seen time and again, a slight tweak to a search algorithm is enough to send e-commerce businesses plummeting through rankings, and the profits with it.

A physical store is a great solution: businesses can rely on passing trade and once their area is established, it’s there. There’s no constant fight for position on SERPs or Amazon. This is also a unique branding opportunity, and a way to become known among consumers.

Take Velvet Caviar, for instance. This fresh manufacturer of phone cases is growing rapidly and has a range of partnerships with retail locations like Urban Outfitters.

Cheaper Customer Acquisition

Online customer acquisition is a complex and expensive undertaking. Each customer that makes it to the checkout can eventually cost a significant amount through PPC and optimization activities, making a significant dent in profits. If an e-commerce business is active within a particularly competitive area, these costs can be incredibly high.

To make matters worse, customer acquisition costs (CAC) are steadily rising. In fact, ProfitWell released a piece of research recently which found those costs have risen by almost 50 percent over the last five years.

With a physical location, the costs of customer acquisition are generally lower, more predictable, and do not fluctuate according to the activities of competitors.

Conquering the Reverse Supply Chain

As online stores continue to grow in popularity, they are racing to find a solution a growing “reverse supply chain.” This includes a large volume of returned items.

Returns are more common online, given that customers make less-informed purchasing decisions. A customer might buy a coat, for example, but find that it does not fit quite right. Once the item has been returned, it can be a logistical issue for online retailers to handle the reverse supply chain.

Retail stores cut down on the number of returns, given that customers get to see the product in their own hands and make sure that it’s the one that they need. Of course, having an in-store representative makes it easier to deal with the returns too.

Rich Customer Experiences

E-commerce is wildly convenient, but it certainly lacks something. Shoppers agree, and many will remain faithful to brick-and-mortar stores because they like to see, touch and feel the products that they are going to purchase.

If you have a product that is difficult to describe, this is a massive opportunity. Your customers can feel its quality with their own hands and see its benefits in the flesh.

This craving for experience is very important, too. Many retail stores capitalize on our desire for remarkable experiences by cultivating unique environments and atmospheres. Think about the personality of the stores that you have been to – it’s a powerful opportunity for a brand to resonate with customers.

The Potential for Upselling

If a customer is browsing Amazon for a Trolling Motor Battery, let’s say, they can search and be presented with thousands of options. Our hypothetical e-commerce company might get lucky and their product will be chosen – but what if our company also stocks lamps and other items?

E-commerce isn’t the best arena for upselling. This all changes in physical environment, though, where customers can browse products freely and get a good understanding of what’s on offer. That same customer shopping for lightbulbs will also see the lamp and perhaps some beautiful new LED lights and make the purchase.

While large e-commerce platforms offer content correlation algorithms, there’s no guarantee that the recommended products are offered by the same e-commerce business.

Build a Link with Customers

E-commerce analytics are incredibly valuable. If an e-commerce store is able to see how people interact with its website and products, it can adjust to optimize the experience and the amount of products it sells.

Retail locations offer the potential for a much richer opportunity, though: genuine conversation. Online, we have lots of quantifiable data but qualitative data is hard to generate. A quick conversation in a store can give you a good idea of how your shoppers see your business and the products you offer.

Of course, you can also make interesting links with new customers. Passing trade should not be underestimated as a revenue stream, and those new customers might spread the word about your retail store.

I hope that this post has opened your eyes to the myriad benefits of brick-and-mortar retail, and given you an idea of why retail can continue to go from strength to strength in the digital age.

About the writer: Michelle Aran is the CEO of Velvet Caviar, a pioneer in the e-commerce and retail space. She has built one of the most successful designer phone case brands in the world over the span of the last five years, and her skills for growth hacking are second to none, which has allowed her to create a social media empire in excess of one million followers.

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