Brick and Mortar or E-Commerce: What Kind of Business Should You Start?

If you wanted to start a business 100 or even 20 years ago, you would have had no choice but to find a physical location and base your operations from a storefront. In the digital age, however, you have the option of making your startup company entirely internet-based. Even if you sell real-life products instead of web-based services, you can do so without leaving your house.

E-commerce is not overtaking brick-and-mortar businesses the way many people expected, though. Mainstreet retailers still play critical roles in the economy. Instead of going with what is popular, you now have a decision to make: should your business be brick-and-mortar, or digital? Another question, how do you decide which is right for you? Let’s weigh a few of the positives and negatives of each.

Brick-and-mortar

Positives: E-commerce is convenient, but the truth is that brick-and-mortar businesses still dominate the shopping landscape. Of the 10 top US retailers, only one is online—Amazon. Customers are still choosing physical locations more than ordering online because not only do they get to see and feel their items (and therefore imagine what it would be like to use them at home more effectively), and it’s easier to return them if they don’t work out.

According to a survey from Retail Dive, 49 percent of 1,425 US consumers chose to shop in-person instead of online because they wanted to take their products home immediately. Despite not having to leave home when buying on the internet, there is still the 3-5 day waiting period for products to arrive. Opening a brick-and-mortar business also opens up more opportunities for healthy customer relationships when you can smile at them.

Negatives: Generally, brick-and-mortar enterprises cost more money. The startup expenses are steeper; there’s rent to pay and lights to keep on. Your customer base is also limited to people in your immediate community. Instead of accepting online orders 24/7, your hours of operation are restricted to whenever you or employees can be awake and present. You also have less control over what happens around your location, too: if surrounding real estate deters people from finding you, then the move can be expensive.

E-commerce

Positives: Online businesses are cheaper to start up, and there is always the inherent convenience that comes from shopping via the internet. Many digital entrepreneurs find ways to work entirely from home or on the road, and following their steps would allow for a more flexible work schedule.

There are also different kinds of ways to practice e-commerce, too. Perhaps you could sell things you make in your home on Etsy and ship them to customers. If you do not want to have an inventory, or even see the products, you can launch a local or national drop shipping business where you purchase goods from a manufacturer and resell them with your own brand.

Negatives: Web-based operations are more dependent on marketing than their physical counterparts. While people can find brick-and-mortar outlets while walking down the street, you are exempt from the benefits of happy accidents. SEO works differently for you, too: when people search for nearby businesses online, you have no visitable location, so you don’t show up.

You also have to work harder to earn consumers’ trust. There are abundant scams and fraudulent companies online, so internet users are wary of anyone trying to sell them something. It’s possible to establish legitimacy, of course, but doing so necessitates a more strategic approach.

Blending a bit of both

Why settle for only one option, though? It’s not a binary, especially nowadays. Numerous businesses are finding ways to double as brick-and-mortar businesses that leverage the e-commerce space, and some start as one and become the other.

Maybe you can begin as a brick-and-mortar store, but accept online orders and ship around the world (this way, you still benefit from drive-by visibility, but consumers might order from you when they perform a Google search later). Or vice versa, you sell products online but eventually grow enough to open your own warehouse or storefront. Exploring both physical and digital landscapes provides you with a unique kind of legitimacy and brand recognizability— and customers may feel more comfortable interacting with a business that has a broader presence.

Either business model requires a different approach, so your decision should factor in how much effort you are willing to put in alongside how much time and capital you possess. Will you choose to open a physical or online business, or maybe a mix of the two?