Pros and Cons of an Online Store | Retail Management

Learning Objectives

• Examine the advantages and disadvantages of running an online store

Online, brick-and-mortar, or both? There are advantages and disadvantages to both:

You can find more information on our web, so please take a look.

Brick-and-mortar only

The advantages of a brick-and-mortar store are pretty clear. The shopper can have an entirely immersive shopping experience, where you control everything from the product he sees to the music he hears while he views it. The visual display opportunities only end with your imagination, and add on sales are easy while you have a captive audience.

The disadvantages of brick-and-mortar only are also pretty clear. Shoppers are short on time and stingy about where they spend it. If 51% of all shopping is done online, your brick-and-mortar store is capturing its tiny piece of the other 49%. Online shopping has grown every year. That means that brick-and-mortar&#;s piece could get smaller every year, until it evens out somewhere in our future.

Online only

The advantages of having an online store only start with capturing that 51% of all shopping. Trends favor ecommerce right now and that&#;s not likely to change anytime soon. Have a site that&#;s easy to find, easy to use, and you have conversions.

You also don&#;t need a large sales staff to run an online site. There are no &#;store hours&#; requiring two or three employees. And there&#;s no need for a building, carpeting, lighting, fixtures . . . overhead costs are pretty low, which means your profit is bigger and your start-up costs are lower.

The disadvantage of online shopping is attention span. Your shopper has little or none, unfortunately. While a customer can linger in a brick-and-mortar store for hours, allowing a retailer to leverage visual display to increase conversion, an online shopper can be on your site for a minute or less. That&#;s not much time to increase the ticket.

If you offer perks like free shipping, which online shoppers now look for and expect, you can also damage your margin. Large products, like bags of dog food or furniture, can be expensive to ship and if you&#;re assuming that cost, you&#;re losing money. It&#;s because of this that, in many areas of retail, online customers are just not as profitable as brick-and-mortar customers.

Online and brick-and-mortar together

The advantage of having both a brick-and-mortar retail location and an online store is the ability to appeal to your customer through both channels. As was mentioned earlier, shoppers are increasingly engaged in omnichannel options. They may shop online or in the store, and the more seamless you can make the shopper&#;s experience as they bounce between the channels, the more successful your retail business will be.

Operating online and in brick-and-mortar also allow you to appeal to a larger variety of shoppers by offering them different ways to shop your merchandise. Some customers will resist purchasing items online, preferring a personal experience. Other customers will avoid brick-and-mortar and defer online most of the time. You can capture both these audiences with both offerings.

Your website can also act as your window display. If your window display attracts customers into your store from outside on the street, your website can attract shoppers into your store while they&#;re sitting on their couches at home.

The disadvantage of both is that brick-and-mortar is an area of retail that&#;s adjusting to online trends, and retailers are finding themselves in a position where they have to shrink their store footprint to continue to be profitable. Online allows you to grab some of that business that&#;s being sucked out of your brick-and-mortar location, but at the same time it can be distracting. Also, your online business may attract loyal brick-and-mortar customers away, converting profitable shoppers into less profitable shoppers.

Practice Questions

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• Pros and Cons of an Online Store. Authored by: Freedom Learning Group. Provided by: Lumen Learning. License: CC BY: Attribution

Retail is characterized by being a business, solid and cost-effective, but the technological advancement has changed things. Known then the advantages and disadvantages of retail trade.

The retail trade or better known as retail the traditional and most direct means of doing business, is an exchange between the merchant that sells a product and the customer that purchase.

However, with the growth of online commerce, retail as it may not necessarily be a transaction face-to-face, but has to be carried out without the presence of intermediaries.

This aspect leads to a degree of transparency and accountability in the management of the retail salesas observing it from the point of view of the customer,  you do not have to be provided by a third party to express their consumption needs. And as a trader, you can promote your offers on their own terms and to respond to first-hand customers.

But this relationship of openness between the seller and customer have their pros and cons, because that comes hand in hand with a greater responsibility as the interactions of the service provided to the client become more customized and errors have the potential to undo the so encouraged loyalty to the store.

As in any activity, not everything is rosy, because there are a number of advantages and disadvantages of retail trade that in turn can be differentiated from other sectors such as wholesale and the online business, below we highlight the most prominent:

Advantages of retail trade

1. Due to that the retailers sell products directly to end users, they can earn more for the same items than if you were a wholesaler, as these need to leave space in their pricing structures for retailers to obtain gains from these same products.
2. A trader who sells a pant directly to customers pyou can ask for the full pricebut a wholesaler that offers the same pants you must sell it to the retailers at a discount to the retailers also can earn a slice of the pie.
3. A business retail offers a large amount of marketing opportunitiesranging from the sampling of food products, through the branch of the clothing, and highlighting the possibility of being able to make recommendations personally to the client.
4. The use of marketing strategies help to sell items at retail and to develop relationships of fidelity that can lead to repeat sales.
5. A store retail will have a better performance for the type of companies that are looking for sell a select quantity of productswhile an online store may work better for those that offer a wide selection of items.

Disadvantages of retail trade

1. Retailers tend to operate smaller companies that wholesalers and therefore handle less volume and are less opportunities to obtain better prices.
2. The use of marketing strategies can be costly and require additional manpower and infrastructure.
3. Some retailers may have difficulties to make their marketing strategies to clients.
4. The emergence and rise of e-commerce has made this trend a competitor for the retail sector traditional.
5. Open an online store is much cheaper than a physical store retailer, because there is no rent to pay or bills of services directly related to the store, with the exception of web hosting, and technical support.

Digital solutions designed for the retail

The retail trade you have at your disposal a set of tools developed to enhance its functioning and to ensure higher sales volumes, it is the portfolio of solutions developed by the startup Intelligenxia.

A good example of the digital tools available is the Mobile Marketing, which provides a means of continuous interaction with the clients, allowing to provide a more personalized treatment to keep you informed of the deals of the store.

Conclusion

To explore the advantages and disadvantages of retail trade it is possible to obtain a more complete vision of the good and bad of this activity, however remember that the retail has survived throughout history and has demonstrated his strength to be able to adapt to changes in technology and consumption.

To ensure best performance it is necessary to maintain a permanent monitoring of the operations of the store and make technology an ally, being able to implement the use of e-commerce as a complement to the physical store, which will enable you to keep the loyalty of the customers.

For more information, please visit retail store product management.