Online Store versus Brick & Mortar (Part 1)

Behind Ellie and June Online Store Versus Brick and Mortar

I chose to start Ellie & June as an online boutique over a traditional brick and mortar store for one major reason: financial prudence.  In full disclosure, I often fantasize about having a physical space in the Boston area.  I’d love to have at least one brick and mortar store in a great location; a place where my kids can go to when they’re a little older to help with the family business.  As a child, my parents owned a billiards business in Colorado.  Some of my favorite memories were counting quarters from our coin-ops at the local pub with my Pops.  So when it came time to evaluate the appropriate fit for Ellie & June, we definitely considered the impact of both options in the short and long term.  Ultimately, we chose the online store; so today, I wanted to discuss our evaluation, and highlight some advantages and disadvantages of an online store over a brick and mortar location.

I’m going to divide this up into two posts to avoid a single phonebook-length post.  Today, I’ll touch on four of the reasons we chose to move forward with an online store (lower capital requirements, the ability to test your market, more flexibility, and the rise of ecommerce).  In another post, I’ll discuss four of the major downfalls of having an online store over a brick and mortar location. Keep in mind this is relative to our business strategy, and may not be applicable to all online businesses.

Capital Requirements (Online Store Wins)

Finding and securing a physical space is daunting.  Especially if you’re paying attention to what’s happening to various classes of malls across the country.  Upscale class A malls are luring away customers from local regional malls, and the most luxurious brands are paying prime dollars to secure their space at that gorgeous upscale shopping center.  All of my Colorado people can now marvel at the 70,000 square-foot Restoration Hardware in Cherry Creek at the expense of them shutting down their other locations at local regional malls.  That said, when I mentioned above that I envisioned a physical space down the road for Ellie & June, I didn’t mean I’m willing to take any piece of commercial real estate available.  I want it to be thoughtful and done right, and the bottom line is there wasn’t money to do that right away.  As a new store, we were looking at a few months of rent upfront plus a hearty damage deposit.  Then we would have to keep the lights on, every month, for at least three years.  We haven’t even begun to talk about hiring people to run the place.

Now don’t get me wrong, online businesses can add up too.  After integrating accounting systems, working with fulfillment centers, etc., the costs definitely add up.  But they still pale in comparison to the physical space in our case.  We wanted to spend that money on product.

Test the Market (Online Store Wins)

Starting a business online can give you a great opportunity to test your market without the long-term commitment of a physical space.  We all think we have great ideas, but it can be a rude awakening when there are not enough people who agree with you to monetize it.  Getting started online to see how people are reacting to your products and services is a huge plus.  As a new business, you may start out with an idea, and then evolve and adapt as you receive feedback from the marketplace.  My parents started that billiards business with the intention of selling pool tables.  They ended up receiving most of their revenue from coin-op tables in bars and through cue repairs.  You’ve got to adapt, and you may have a better shot at doing so if you’re not tied down to a longer-term lease.  Sure, there are some places that offer shorter-term leases, but expect your monthly rent to increase in addition to the amount of capital you need to pay upfront.  Landlords operate a business too.

Now the huge disclaimer with starting online to test the marketplace is that you’ve got to have a long enough track record and reach through marketing to accurately assess your online business.  It’s important to be realistic about how long this “testing” will go on for in order to make a good judgment.

Flexibility (Online Store Wins)

Remember above when I said that if we went with a physical space, we’d have to keep the lights on every month, and that’s without considering paying for help?  Physical spaces typically come with very consistent hours.  Consistent hours mean you’ll need to be physically available to meet those hours with very little exceptions.  That means that when you decide to finally go on a much needed vacation, you need to find someone who can maintain the store for you while you’re gone.  Physical spaces don’t leave you with as much flexibility as an online store.

Now, a little dose of reality is that even though an online store offers more flexibility, the hours are non-stop.  You’re still available at all times, you’re just probably not as bathed and well clothed as you would be if you had a physical store.  Or maybe that’s just me.  Having an online store means that you can pick up your child from school or work remotely if you have to.  This is hugely valuable.  This may save you thousands in after school care alone.  It all depends on your personal needs and your preferences on where you’d like to allocate your capital.

Industry Trends (Online Store Wins)

I touched on the rise of ecommerce in this post.  You truly can’t get through the business section in the Wall Street Journal today without a mention of the shift to online shopping, mobile shopping, or social media.  I remember my first online purchases back in the early 00’s, when my Victoria’s Secret swimsuit took all summer to arrive.  Now I go to Best Buy, get annoyed that no one is helping me, and buy the same product on Amazon (to be delivered the next day) while I’m exiting the store.  Best Buy basically just became a showroom for Amazon.    People are becoming so confident in online shopping, that they’re buying their mattresses online without even laying on them.  Mattresses!!  They come all rolled up and ready to grow.  Just please don’t return them.  I digress.

There is a wave to ecommerce if you can get in and figure out how to do it right.  It’s arguably already very saturated in some areas, but the good news is that the world is a big place, and you only need a small fraction of folks to love what you do to be highly successful.  Your reach is global when you opt to go online, and people are headed there, period (if they’re not there already).  Further, another topic worth discussing is whether it’s easier to start online and grow to brick and mortar, or vice versa.  Logistics, inventory tracking, and supply chain management can become a nightmare trying to marry the two.  Ask just about every large retailer who has had to adjust everything they do to have an online presence.  We’ve seen some of the biggest names in retailing have to completely reevaluate the way they do business.

Okay, I should stop here.  There’s a ton more to touch on, namely where online businesses fall short.  And they do, trust me.  My little store is only five days old but I can tell you right now, a few things would be easier in a physical space.

Alright then!  Comment if you’d like to discuss, I’d love to get your thoughts 😀

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4 Comments

  1. Kristin
    July 7, 2016 / 1:54 pm

    I realize this is off topic to the post above, but I am curious where you find the products you sell.

    • Kristina Nissen
      July 7, 2016 / 3:37 pm

      Hi Kristin! Thanks for reaching out! I’ve found everything so far via tradeshows, online showrooms, even some through social media and etsy. There’s certainly no shortage of talented people out there 🙂 I really appreciate you reading!

  2. Ashley Kolb
    July 7, 2016 / 12:04 pm

    I really appreciate your insight . It’s refreshing to see how much thought and hard work went into what seems on the outside to be one of the easier decisions surrounding your new business. Keep it up, you really have something great going here!

    • Kristina Nissen
      July 7, 2016 / 1:33 pm

      Thanks so much for the feedback Ashley!! I’m so happy to hear this was insightful in any way 🙂 I really appreciate you following along, thanks so very much!

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