Brick-and-mortar vs. e-commerce/ omnichannel 

How and where you choose to retail your product or service would depend on a variety of factors. While a brick-and-mortar store might have been the traditional way to retail products, the advent of the Internet, accompanying e-commerce platforms and the COVID-19 pandemic have changed the way we shop. Each different mode of sale, be it a physical shop, online or a combination of both, has its own pros and cons. You should also consider factors such as your initial investment, type of consumer (e.g. those who are e-commerce averse), the type of product/service, and your budget. 

Brick-and-mortar 

A brick-and-mortar store such as a furniture shop, a grocery store or a car showroom refers to a physical storefront where shoppers are able to view, handle, test and try products in person before making a purchase. Sales personnel would usually be on-hand to answer any queries and make recommendations. These stores cater to consumers who might prefer to touch and feel the actual product, are wary of surrendering their personal information during a transaction, want to bring their purchase home immediately (rather than wait for delivery), and enjoy the personalised experience that e-commerce stores cannot replicate.   

The initial investment for a retail store can be high. Considerations include licencing fees, rent, expenses for facilities and manpower, inventory costs, insurance, marketing and advertising, and rental of a point of sale (POS) terminal. Staff training, inventory refresh and investing in new technological features to keep up with fellow competitors will form the core of business operations. Ultimately, the aim would be to make customers happy and keep them coming back. 

E-commerce 

E-commerce refers to the retailing of products and services on an online platform. This is usually carried out on e-commerce websites such as Amazon, Lazada or Shopee with deliveries made by third party logistics companies. The onset of the COVID-19 pandemic has been accompanied by a boom in online shopping. Online shopping is also extremely convenient, saving time and allowing shoppers to compare prices and order virtually anything 24/7 from anywhere in the world. 

Start-up costs for e-commerce are lower as compared to a retail store. The main investment would be your business’ website, and this would include payment for domain name, hosting, web development and maintenance, as well as marketing and advertising campaigns.  

Depending on the type of business you have, for instance, dropshipping (where you sell products made by another company), keeping an inventory may not be necessary. Creating an inventory is required, however, if yours is an order fulfilment business, i.e., you make the merchandise you are selling. Business operations will then include inventory management, warehouse rental, ensuring an efficient fulfilment and shipping logistics system, tracking of customers’ purchasing patterns and a strong customer support system. Investment in cybersecurity is also vital to prevent hacking attacks and data breaches.    

Omnichannel 

Omnichannel commerce refers to the sale of products using more than one channel such as combining offline and online shopping, also known as “click-and-mortar” or “phygital” retail. An example is a physical store that also operates a digital storefront. Many such stores can be found in Singapore, retailing consumer products ranging from clothing, furniture and household electronic equipment to consumables and daily necessities, such as Uniqlo, Courts or Cold Storage. This enables shoppers to view the item before making the purchase online or ordering it online and then collecting it at the physical store. 

Omnichannel retail offers the ultimate convenience for customers by marrying the offline and online experience with the creative use of artificial intelligence, data analytics, and virtual and augmented reality. A successful omnichannel retail should include: 

1. Convenience and reliability in the mode of purchase and return options 

2. Seamless shopping eco-system between different channels 

3. Active customer engagement with provision of new content, enriching experiences, and opportunities for interactions with other like-minded users 

4. Personalised shopping experiences such as customised push notifications/in-app messages and one-to-one advisory services 

5. A loyalty programme that incentivises return patronage 

6. Good quality products 

7. First-rate customer service support 

You should weigh the pros and cons of each mode of retail, consider your target market and nature of your product as well as your budget before deciding if you should set up a physical or digital shopfront – or both! 

References 

Ferguson, Lucy. “The Future of Shopping: 5 Consumer Trends Shaping the Retail Landscape”. Posted June 9, 2021. https://brc.org.uk/news/the-retailer/the-future-of-shopping-5-consumer-trends-reshaping-the-retail-landscape/ 

Aleksic, Marina. “Ecommerce vs Retail – Learn Who Wins the Shopping Battle {Detailed Comparison}”. Posted March 19, 2021. https://ccbill.com/blog/ecommerce-vs-retail 

Kumar, Amit. “Future of Retail is Omnichannel”. Entrepreneur. February 18, 2021. https://www.entrepreneur.com/article/365678 

Marr, Bernard. “The 5 Biggest Retail Trends in 2021”. Forbes. November 16, 2020. https://www.forbes.com/sites/bernardmarr/2020/11/16/the-5-biggest-retail-trends-in-2021/ 

Briedis, Holly, Brian Gregg, Kevin Heidenreich, and Wei Wei Liu. “Omnichannel: The Path to Value”. Posted on April 30, 2021. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-survival-guide-to-omnichannel-and-the-path-to-value 

Dopson, Elise. “What is Brick-and-Mortar Retail & Should I Have My Own Store?”. Posted on June 4, 2021. https://www.shopify.com.sg/retail/brick-and-mortar