E-commerce vs. Brick and Mortar: Which Strategy Fits Your Business?

Charming bistro with striped awnings, showcasing a blend of e-commerce and brick-and-mortar retail strategies.

The Role of Bricks and Mortar in a Virtual Business Era

If you came of age during the 21st century, it might be tempting to look at business opportunities as if they could remain completely virtual while expanding globally. After all, the first billion-dollar virtual business was sold back in the 1990s, and in many industries, there may not seem to be a need for a physical retail presence.

Yet, while this may be logistically true in many cases, there is an interesting trend in industries where companies initially avoid bricks and mortar, only to later add it.

The Amazon Example

Amazon serves as a prime example of this trend. After building distribution centers worldwide to facilitate centralized shipping, they are now introducing bricks and mortar retail centers in the Northwest. These physical stores allow customers to pick up their orders on the same day they are placed.

Rather than shrinking, Amazon is expanding its physical presence. However, while this strategy may work well for them, their competitors—Walmart and Kmart—who pioneered in-store same-day pickup of groceries and other products, have scaled back similar services.

One possible explanation for Amazon’s move is its desire to compete in urban areas where its rivals already have a foothold. However, generating significant profit from these brick-and-mortar additions may still take a few years.

Should Your Business Add a Bricks and Mortar Presence?

If you are considering adding a physical retail presence to your business, here are some key factors to evaluate:

Is Revenue Strong Enough to Add Lines of Credit?

If you are expanding into physical retail, your financial performance likely supports securing lines of credit to facilitate growth. One potential financing partner, Advanced Funds Network, provides businesses with additional credit power within hours of an online application. Their system has successfully supported businesses of various sizes during expansion periods.

A crucial aspect of expansion is ensuring access to sufficient credit to cover unexpected costs. If you are confident in your financial security, you are more likely to succeed in a retail expansion.

Are Your Manufacturing Sites Compatible?

Retailers that import goods from countries like China or India often have streamlined shipping processes. Others choose to work with local manufacturers and distributors. However, businesses that manufacture and sell retail have a unique opportunity: locating manufacturing sites close to their retail stores.

For example, In-N-Out Burger and Maya Botticelli are two food and restaurant chains that enhance franchisee success by situating their manufacturing and distribution centers near their brick-and-mortar locations. Amazon has taken a similar approach with Procter & Gamble, placing its shipping centers inside Procter & Gamble factories rather than opening separate brick-and-mortar locations.

The best strategy for your business depends on your product or service. However, if you can consolidate retail and manufacturing without sacrificing sales, you will save both time and money.

Making the Decision

Deciding whether to establish a brick-and-mortar presence or remain an e-commerce business requires careful consideration. If your distribution or manufacturing facilities are strategically located and your company is financially prepared to withstand downturns, you are well-positioned to expand into physical retail successfully.

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