Industry news, as of late, has been dominated with reports of major national retailers closing hundreds of stores across the country. This has been part of restructuring as well as efforts to stem losses from operating costly locations which are underperforming. In closing these locations, these retailers are going to be refocusing resources on their eCommerce channels with the goal of seeing an uptick in sales and righting the ship.
In stark contrast to this, I’ve been keeping my eye on another trend, one that was also a hot topic of conversation at the annual Shoptalk convention in Las Vegas. While larger retailers are closing physical locations, eCommerce brands, such as Birchbox and Warby Parker, who were solely digital, are starting to open physical brick-and-mortar retail shops of their own. With major retailers doing the exact opposite, it’s puzzling as to why eCommerce brands are even considering it; however, if done right, it can give eCommerce brands a competitive advantage
There are many variables that an eCommerce brand must keep in mind if they’re entertaining the idea of opening a physical location, the most notable of course, being the cost and overhead associated with running it. Beyond the cost, however, there are significant advantages that a physical retail store offers.
As we heard from James Rhee, the CEO of fashion brand Ashley Stewart (and one of Dotcom’s clients), physical retail locations offer brands the ability to focus on the shopping experience and engage with customers in ways that eCommerce alone simply cannot do. Moreover, James is an adamant supporter of brands fighting to keep physical retail locations as they offer a better margin productivity rate. In the long run, that’s quite the attractive return.
For eCommerce brands taking this path, it’s critical that they consult their fulfillment partners at the earliest stages so that they can adjust accordingly and recommend the appropriate multi-channel strategy. There are also other factors an eCommerce brand and their fulfillment partner must consider when operating a physical retail store, one being inventory accuracy. As I covered in a previous blog, technology is advancing at incredible intervals with solutions readily available, such as RFID, that can help brands simultaneously lower costs and enhance the customer experience.
If you’re thinking about taking the step towards opening a physical retail location, Dotcom can help. Reach out to us here and also be sure visit our list of resources including helpful eCommerce case studies, whitepapers and eBooks.
By Rob Coon, VP of Sales and Marketing