Warby Parker, Allbirds, Peloton, and Casper are some of the brands that have successfully expanded from e-commerce into brick and mortar businesses. But why did they do it?
By launching physical stores these brands managed to boost presence, build more trust, and reach new audiences. Not only that, but they also got to tap into 89.9% of the retail revenue that’s generated outside the digital world.
To help you transition, the following offers a quick guide on how to set up a brick and mortar store for your online business.
The task of setting up a physical retail store can be overwhelming. But, with some planning, analysis, and careful execution, it doesn’t need to be that daunting. Here’s what you need to know.
Needless to say, location can make or break your business. The trick is to have a good understanding of your target customers and place the store within their reach. In other words, you should know the ideal customer’s shopping habits, place of residence, and where they work.
The e-commerce customer segmentation tools can help you gauge the above-mentioned parameters, but it’s only a part of the story. You also need location analysis techniques and tools to determine if a venue is the right fit. Ideally, you should have a clear idea about the household income in the area, traffic patterns, age range, as well as lifestyle habits.
At the same time, it’s advisable to take a look at the competition and hospitality venues at that location. The clients who already frequent the area are logical targets to come to your shop.
When you pick the location, you need to get federal, state, and city licenses and permits for running a brick and mortar retail store in that area. More importantly, you could be required to obtain additional licenses, depending on the specific services or products you provide.
All these may vary from one state or municipality to another. Nevertheless, you need to conduct thorough research to determine all the required documentation. Don’t hesitate to hire a law firm or a retail consultant if need be.
New York, for example, provides a comprehensive starter guide for retail stores, plus there’s a step-by-step retail wizard. This way the local officials ensure no stone is left unturned in terms of the required paperwork and there’s no need to outsource the work.
The importance of a realistic and actionable business plan can’t be overstated. From leasing options to staffing expenses and overhead, a good business plan gives you a clear idea about financial requirements for your project.
What’s more, the plan shows your potential funders how you plan to use their money. And if you want to do an out-of-pocket expansion, the business plan provides you with a financial and strategic framework. The plan also needs to detail market viability, sales and marketing tactics, customer profiles, etc.
Again, this might seem like a daunting task, but the U.S. Small Business Administration can provide help. Their website has a free guide for writing business plans and there are other free online resources with business plan tips and tricks for retailers.
The idea is to design a unique place that shows visitors everything that makes your brand stand out. This includes an alluring storefront or window display and an interior that keeps customers coming back for more.
In practice, you need to consider showcases, counter displays, signage, wall racks, promotional displays, and more. You also need to determine how much inventory and merchandise to buy before the opening. More often than not, warehouse storage is a must and the same goes for a POS system to keep tabs on your sales.
Expert Tip: Those who use e-commerce platforms such as Shopify can utilize them to manage inventory and sale hardware.
According to MIT’s Sloan School of Management, about 6% of all sales are lost if retailers fail to provide sufficient customer service. Under-staffed retailers don’t have enough manpower to offer assistance to shoppers which results in poor customer experience and lower sales.
To prevent this, you should do some competition assessment. Go to similar stores in the area and determine how many staff members there are during peak and off-hours. Check how many people are at the registers and on the floor, then try to figure out if that’s enough.
The number of staff that fits your business depends on the venue’s size and the number of customers you expect. In addition, you should also factor in the cost and time it takes to train the staff, if necessary.
This article only scratches the surface of what it takes to expand an e-commerce business into a brick and mortar store. However, it’s more than enough to give you a basic framework to act upon. And keep in mind that more than 80% of Millennials still love to shop in physical stores.