Retail or E-tail? Buying Online vs. Buying in Person

Buying online vs. buying in person

When it comes to brick-and-mortar vs. e-commerce stores, business owners must recognize that each channel presents a fundamentally different buying experience. 

Buying online

Consider the following essential factors that characterize the online shopping experience:

• Customers use a computer or mobile device and must have a reliable internet connection. 
• Customers can’t see, smell, touch or try the product.
• Customers rely heavily on the photos and descriptions the e-commerce store has posted on its website. 
• Customers can buy online from nearly anywhere but must wait for the seller to ship the item to them. 
• There is little or no human interaction during the entire buying process.

Buying in person

Shopping at a brick-and-mortar store involves different considerations:

• Customers must drive (or otherwise transport themselves) to the store, creating an inconvenience.
• Customers can bring the products home immediately. 
• Customers experience the product and store environment with all their senses. For example, they may view demonstrations, taste samples or try out products. 
• Customers can interact with sales staff and ask questions. 
• Customers can make shopping a social event with friends.  

Which products are typically bought in each channel? 

The ability to buy online has given customers control over how much they pay and from whom they buy. However, the product itself is a crucial factor in whether they buy online or in person:

• Familiar items: Consumers tend to buy familiar items online; they understand what they’ll be getting and can usually predict how the purchase will turn out. 
• Unfamiliar items: Consumers may prefer to buy unfamiliar items in person. They may need to return the product and will forgo the convenience of an online purchase to gain certainty. 

Small business owners can strategically price and promote products in each channel to leverage consumer preferences. Here are a few examples: 

• Leveraging online sales: A branded product consumers have likely bought before — and can find from 50 other retailers — may be more cost-efficient to sell online only, priced aggressively.
• Leveraging in-store sales: Proprietary or new-to-market products that consumers must see and feel in person to buy confidently may justify storefront real estate and inventory costs without deep discounts.
• Adopting an omnichannel strategy: Retailers may adopt an omnichannel strategy. For example, they might sell products with significant sensory components, such as perfume or shoes, in-store to first-time buyers while offering them online for repurchases.

Pros and cons of offering in-person retail shopping

In-person shopping via storefronts can create value for the business and its customers, but it also carries significant downsides. Here are some pros and cons of offering in-person retail shopping. 

Pros of in-store shopping

When a retailer has an in-store buying option, the business and its customers enjoy the following benefits: 

• Customers can try on or test products in a store: Nothing truly takes the place of an in-person experience. A customer may want to sit on a sofa to see if it’s comfortable, try on clothes to see how they fit or taste a wedding cake sample before ordering. Sampling is a particularly effective strategy, especially with younger consumers. An Advantage Solutions study of Gen Z consumers revealed that 70 percent said food samples are very influential, two-thirds are convinced by beauty samples and 60 percent of young male buyers said beverage samples can sway a purchase.
• Retailers can boost sales through displays and promotions: In-store displays and promotions are effective retail marketing strategies that can prompt impulse buys and first-time product purchases.
• Customers get instant gratification: There’s a reason people line up at the Apple Store when the company releases a new iPhone: They want to walk out with the phone in their hands and the ability to use it immediately.
• No shipping is necessary: Because the product is already in the store, no one has to worry about shipping times and costs or items getting lost in transit.
• Sales staff can help customers: Hiring the right sales team can create a positive sales culture in your store that prioritizes assisting customers, hearing their needs, answering their questions and making helpful suggestions. Onsite sales staff can suggest upselling and cross-selling options that boost sales and customer satisfaction. Many customers appreciate this human interaction and will feel more connected to your business.
• Create a community with in-store events: A physical location allows retailers to create a local marketing strategy that includes opportunities for customers to gather for events related to the business’s product line, such as cooking classes for a kitchen goods store. These events can help retailers sell more products and strengthen the customer bond.

Cons of offering in-store shopping

A brick-and-mortar store also brings some distinct disadvantages, including the following: 

• Rent is expensive: If your store is somewhere with excellent foot traffic, rent can be steep. Many shopping centers charge a percentage of sales in addition to a fixed monthly rent. Other costs include utilities and security. According to Nick Gausling, consumer sector consultant and managing director at Romy Group, daunting overhead costs make it hard for online retailers to move into the physical sector. “It’s much easier for brick-and-mortar retailers to expand into digital channels than it is for e-commerce retailers to launch physical stores,” Gausling explained. 
• Retail locations mean higher payroll costs: Unless you have a tiny store and you’re its only employee, you will have to budget for hourly employees or full-time staff. You’ll need to run payroll at specific intervals regardless of your total sales.
• You’re at the mercy of factors outside your control in a retail store: Because customers must travel to your store, your sales will be affected by the weather, parking availability, crowds and unforeseen occurrences.
• Your display space and product selection are limited: There is only so much room in your store to display items, which will likely limit your product breadth. You’ll have to pay carrying costs if you have additional products in inventory.

Pros and cons of offering online e-commerce shopping

When you set up an online store, you create both benefits and drawbacks.

Pros of offering e-commerce shopping

Online retailers and their customers experience the following benefits: 

• E-commerce stores are available to nearly everyone: Almost everyone can access an e-commerce store, including those who face challenges with mobility, transportation and time. 
• There’s no pressure with e-commerce stores: With no salespeople, online shopping is a pressure-free environment without distractions or influences. 
• Online customers can access research and reviews: Many shoppers use the internet to research products before they buy. You’ll likely win additional business if your product has many good customer reviews and positive references in blogs and industry websites.
• E-commerce stores can offer a broad selection: Space on your e-commerce site is unlimited, so you can sell as many products as possible. Small businesses can afford massive online stores with dropshipping to eliminate inventory costs. 
• E-commerce stores are more immune to outside circumstances: With no crowds, operational hour limitations or weather or parking issues to contend with, shoppers can buy from you at their convenience. 

Cons of offering online shopping

Online storefronts also have some challenges: 

• Online stores require technical expertise: Although e-commerce platforms like Shopify try to make it easy for e-commerce merchants to set up online stores, you’ll still need some technical knowledge. If this isn’t your area, you’ll have to hire someone to set up and maintain your e-commerce store.
• Online stores can’t help customers as much: With no salespeople, it’s challenging to answer customer questions, make suggestions and upsell.
• Online stores must deal with shipping: Unless you have a digital product that customers can download, you’ll need a fulfillment operation to pack and ship products and incur shipping and coordination costs.
• Promotion and sampling are difficult or impossible online: Without a physical location, your promotion options are limited and sampling is nearly impossible.
• Some customers may be unable or unwilling to buy online: Some customers may not be comfortable or knowledgeable about buying online or may lack an acceptable online payment method.
• Online stores face more competition: With online shopping, your competitor is just a click away, whereas going to a competitor takes some effort for in-person shopping. Your online competition isn’t limited by geography; the hotter competitive climate may push down prices and margins.

How brick-and-mortar stores and online shopping can go together

When customers buy in person, a unique payoff drives them to give up time, money and effort to travel to a store and interact. For example, they may want personal assistance when buying to ensure they leave with exactly what they need. They’re willing to risk paying a higher price or finding the item is out of stock. 

In contrast, buying online requires low effort. However, customer expectations aren’t necessarily different. Customers buy online because they expect choice, transparency about inventory levels and the ability to research prices, customer reviews and promotional offers.

So, which method should your business choose? In many cases, you don’t have to; you can opt for an omnichannel strategy with a brick-and-mortar store and an e-commerce presence. 

For example, you can do the following: 

• Showcase in-store service: If customers come to a physical retail environment expecting personal attention, train customer-facing staff to give them a hands-on experience. 
• Emphasize online convenience: Customers who visit an e-commerce website may be driven by a desire to find what they need as quickly as possible. Deliver on this expectation by optimizing product copy to include frequently searched keywords. You can also offer expedited shipping options and let customers check out as a “guest” using their preferred payment form.
• Consider combining strategies: You can also combine your strategies by offering buy online, pick up in-store or having in-store salespeople help customers facilitate online ordering for out-of-stock products. Jennifer Johnson, owner of True Fashionistas, says the buy online, pick up in-store option “works beautifully because customers shop when they pick up their order, resulting in more sales.”

Addressing the challenges of creating a multichannel approach

Creating a multichannel approach may mean building a brick-and-mortar storefront or creating an online presence — both of which can be challenging. However, there are ways to smooth the transition: 

• Creating a physical store from an online presence: Gausling notes that creating a physical store can be expensive and complicated if you’re currently an online-only merchant, but establishing partnerships can ease the process. “Pure play e-commerce businesses should explore wholesale partnerships with established brick-and-mortar retailers to more realistically attain a multichannel presence,” Gausling advised.
• Creating an online presence for a physical store: Gausling agrees that creating a robust digital presence is highly beneficial for brick-and-mortar retailers but notes that they should proceed carefully. “Don’t make the mistake of chasing online sales as a primary KPI, ” Gausling warned. “Your e-commerce channels are there for marketing value and customer convenience.” Gausling recommends using your online presence to guide customers offline when possible. “If possible, you want to guide the customer off the web and into a physical store because you’re more likely to convert the sale, at a higher ticket and with lower returns.” 

Tailor your online and offline efforts to meet customer needs

Shopping is more than consumerism. It may involve spending the afternoon with friends or temporarily changing your physical appearance. Despite the popularity of online shopping, these highly emotional aspects of the buying experience help in-person shopping maintain its appeal.

By recognizing the deeper reasons consumers buy in each channel, merchants can tailor their brand position, in-store aesthetics and marketing messaging accordingly. Online and in-person buying are different experiences, but one isn’t necessarily better for consumers or merchants. By recognizing each channel’s unique value, small business owners can be strategic in what, where, to whom they sell and for what price.