How to Expand Your Online Business to Brick and Mortar: The Complete Guide
There’s plenty of content out there about how to expand your brick and mortar business to the big bad web, and this makes sense given the prevalence of the Internet in the consumer landscape.
However, the utility and importance of having a physical storefront is far from obsolete and the once seemingly endless supply of space on the internet is suddenly becoming both overpriced and overcrowded.
If you have an ecommerce business that you’re currently considering expanding to a brick and mortar, know that you are not alone: Amazon, the global internet tycoon retailer, shocked buyers by opening its first, true brick and mortar space—a bookstore in Seattle.
Some other big names that might ring a bell have recently made the same strategic decision like Casper, Warby Parker, and Bonobos. The stability of the traditional brick and mortar store has not changed despite the boom of the Internet revolution—91.5% of all retail sales still occur in physical marketplaces.
Does expanding to a brick and mortar location make sense for your business?
The introduction of a physical space for your brand is a building block for differentiation and a way to further develop how you want your business to be perceived and labeled by the public.
While the task of expanding to a brick and mortar space may seem daunting, especially if you feel that your expertise is in the digital sphere, it can be a meaningfully profitable move to make.
This is particularly true if you have a product that people are hesitant to purchase without touching or seeing it in person (ex: jewelry) or if you feel that you have customer demand for an in-store experience.
Batch, originally a monthly subscription service, opened up a brick and mortar location in Nashville three years ago. They made the leap to a physical store because their customers were asking for one: “Letting customers drive our expansion has helped us time and again, rather than trying to guess where our customer is headed.”
Other companies looked beyond their customer demand, taking more of a macro-approach, to know that they were ready to expand to brick and mortar.
Great Wine, a wine producer that seeks to start new conversation about wine, opened up various physical tasting rooms because: “A business is ready to open a physical store when it is ready for market changes. Great Wine believes that the market will tell you what it needs, and the key to success is to be ready to change—after all, taste does change over time!”
The move to brick and mortar is definitely not for all ecommerce businesses and taking on the plethora of new costs and responsibility should only be something you consider if you feel that your ecommerce business is being stifled by its Internet parameters, or if you think that you can make the economics of a brick and mortar location work to enhance your business’s overall profitability.
However, if you feel that your business currently lacks the traction you want, your online marketing outreach is having little effect, consumer awareness of your brand is low, and you have the resources to open up a physical marketplace of some kind available (it doesn’t necessarily have to be a traditional store, we’ll explain below), here is a step-by-step guide of everything you need to create a buzz-generating, brand-enhancing, storefront.
Budgeting
While the annoying legal semantics and paperwork of physical real estate will by no means be the most exciting component of your opening process, they cannot be overlooked.
In terms of finances, you must have a firm handle on your available business budget from the very beginning.
Planning for and managing the future costs of your businesses is what Roberta from ScrubzBody™ describes as the tradeoff between the enhanced customer interaction of a brick and mortar location and the increased financial responsibility: “But with that comes the expenses. The rent was a given, but the insurance, the overhead, the fixing of small issues, dealing with the landlord, the signage, etc. all were extras I did not think about at first. My advice is to take absolutely everything into consideration and add another $500 a month, just in case, when thinking about the shift in expenses.”
Crafting your business plan
A complete breakdown of your monetary needs and resources should be outlined in your business plan.
In addition to outlining what the core concept of your brick and mortar will be (i.e. are you looking to create a series of pop-up type shops, more than one permanent physical storefront, a flagship store, a place for merely trying on merchandise), your business plan should answer the following questions:
- Will you need outside financing and, if yes, where will it come from? (i.e. Will you be seeking equity or debt financing? If you opt for the latter, will you be applying for a term loan? A business line of credit? A merchant cash advance?)
- How long will it take for your physical storefront to become profitable without the support of your ecommerce sales?
- If this isn’t part of your business model, outline how you envision the physical space will drive more sales to your ecommerce business?
- What are your parameters for rent or, if you’re buying, the cost of the space?
- Are you looking for a finished space or a space that needs significant renovation? If you plan to renovate, what are you max build-out costs? How much do you plan to spend on furnishings, art and decor?
- What will the size of your physical inventory increase by and what will this cost?
- Who is your target demographic and where are they most concentrated? This will dictate where you will focus your location search for your space.
- What spatial requirements will you require from your store?
- What kinds of permits will you need to operate? What are the regulations for retail spaces in your city/neighborhood?
- Where will you look for your original hires? How big of a staff do you plan to have? What will the hours of your store be? Approximate how much will you spend on a) employee training and b) employee salary?
- What POS system will you use?
- Do your research on the different kinds of systems, some work exclusively with iPads while others can be used with computers, and some have features that might be either absolutely necessary or too superfluous (you can dig deeper on the subject here).
Have experienced eyes go over your business plan: If managing your financials is not your strong suit (and, if it isn’t, know that you aren’t alone), you can work with your accountant to help you formulate your budget and have him or her go over your business plan.
You will need to establish what kind of business structure your store will be: LLCs are the most popular business formations, and becoming an LLC is a fairly simple process that your lawyer will be able to execute for you; working with a lawyer is a way to ensure that your business plan is up to date on the various real estate regulations, legal rules, and necessary permits ahead of time so that when it comes time to open your store, you don’t run into any serious hurdles.
Once you have your business plan and the nitty-gritty details ironed out, you can begin your location search.
Work with a local broker to find spaces that fit the requirements you have outlined and be highly conscientious that the neighborhood you choose to set-up shop in will say a lot about your internal space.
Think about foot traffic, proximity to competitors, and what other businesses in the area call the neighborhood home. Of course, your finances will also play a part in where you choose to build your brand’s space, which is why working with a local broker will help you avoid wasting time looking at places that are far beyond your price range.
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Dreaming up the space
You’ve found the perfect piece of retail square footage—now what?
As you create the outside and inside of your store, return to why you felt that a brick and mortar location would enhance your brand.
Key features of a physical store that your ecommerce business just cannot capture in the same way:
Giving your customer the ability to interact with the product: By putting the product in the hands of the buyer, you give it the opportunity to sell itself; when you start designing your store, ask yourself, what about your product made it demand a physical marketplace (in other words, what wasn’t being adequately conveyed online)?
While the overarching goal of your store will be to espouse your brand in a meaningful way, the heart of your brand is, naturally, the product itself.
Think about how the space itself can enhance the experience of buying for your customers.
What the Internet store often lacks for consumers is the transparency and comfort of knowing what they are buying; with in-person, there are less unknowns.
Julio Zegarra-Ballon owns a Fair Trade store in St. Louis, Zee Bee Market. Bringing his business to a physical space has provided him with the opportunity to share the story behind each of his products—something that has proven especially valuable in driving sales. “What I find myself saying is, ‘Look, you fell in love with the product because it’s beautiful—now let me tell you a story that will warm your heart.’ So customers are just on Cloud Nine. Of course they like what they’re buying, but now they actually feel really good about their purchases, and what they’re supporting.”
Two Guys Bow Ties of Tulsa took another route: in their first, and what they plan to be their only, physical location, they have both a showroom and manufacturing facility. “That for us was one of the big reasons [to open a brick and mortar]. People could see from start to finish how the product was made.”
If clients can come in to your store and then alleviate any anxiety they may have about the product, it’s likely that in the future they will feel more comfortable buying online as they are now familiar with your brand.
It is important to remember that your brick and mortar should not be a means of replacing your online sales but instead of enhancing them; as your physical store draws people in, find ways to direct them online.
Maybe that means you advertise online only sales in your store or maybe you offer a select, exclusive stock in store and a more expansive stock online.
“The person to person experience is the best sales tool in the world.”
Giving your customer the ability to interact with sales staff: The staff you choose to fill your space with are vital contributors to your store’s success.
Roberta from ScrubzBody™ , a skincare brand with both a brick and mortar store and an online business, has felt the importance of customer interaction in driving profit, “I see the difference in sales. Because we get to meet, greet and really get to know our customers, the in store experience is amazing and every time a person walks in, it usually translates into a sale. The person to person experience is the best sales tool in the world, especially if you sell products that are sensory or touch-feely.”
Roberta’s positive experience draws attention to an important point about your staff—they should be the cheerleading squad for your brand.
Be mindful that your hires are passionate about you and your product; customer interaction with your staff can be one of the biggest advantages of opening a brick and mortar store, but it can also, of course, be your downfall.
Michella from Great Wine expressed struggling with attracting the right staff initially: “Attracting people who truly understand the new direction of a company can be more difficult than you could imagine. I needed more people to work in my company in my first year of business, and eventually in our tasting room. But some people had unrealistic expectations over the job or over the company. I have encountered people who pretended to love the company, while all they wanted was only money.”
In the retail world, customer service is everything. You’ll hear that cliche time and time again, because it is entirely true.
If the goal of your physical store is to enhance and encourage the buying experience from your customers, then the staff that are answering their questions about the product, exchanging sizes, or arranging for an in-store online orders can be the difference between convincing on-the-fence shoppers to either buy, or walk out of your store empty-handed.
Two Guys Bow Ties adds, “In the shop, it’s very easy to upsell. We get people coming in for one thing, and they buy three things.”
Giving yourself and your staff the ability to hear and see customer feedback about your product in person: The ecommerce store leaves far less room for customer feedback than being surrounding by your customers while they are fully immersed in the buying experience.
In store, you and your staff can watch as the customer deliberates over and handles your product, inquire about their recommendations and expectations, and more easily hear their concerns.
Further, your brick and mortar is a great way for you to see who your target demographic really is and inform you to make changes if you are not successfully reaching who you would like to be reaching.
Karen Wylie of The Soap Shed commented about how the physical store changed their product development: “Having the experience of selling our products in person, eye to eye, with customers gave us an understanding of what they were looking for. We would NOT have learned as much about our products and how to sell them if we had been online only.”
This again, echoes the importance of having a competent sales and management team to help you get the most out of your physical store; while your salesmen are busy catering to your customers’ needs, part of your store manager’s responsibilities (if you aren’t managing yourself) should include reporting to you about customer feedback and being mindful about the direction that your brand is taking.
Designing a loyalty program that incorporates customer feedback is another great way to bridge your virtual and physical stores together: maybe you provide a link to an online survey about their experience in the brick and mortar location that, upon completion, grants them a discount and leaves them on the homepage of your website, eager to shop.
As you build out your physical space, do not neglect your website.
If upon entering your store you feel that your brand is captured better than ever, but the vibe of your website is dissonant to the vibe of the store, make changes.Renovate the two spaces together as complements, always keeping your product, customer demographic, and brand ethos at the forefront of your design strategy.
In this vein, your two marketplaces should work in tandem.
Karen Wiley uses her physical sales interactions to direct her online marketing: “Participation in shows, festivals and ‘pop ups’ or trunk shows can build your confidence, confirm your product ‘works’ as intended, and help you reword your sales pitch. Nothing like watching a customer’s eyes glaze over with confusion or light up with delight to let you know when you’ve found ‘the right words.’ Then you know what to write about your product on your web pages”.
Giving your customers an experience: Having a physical space allows you to curate a unique environment for prospective customers, as well as your existing evangelists. It doesn’t necessarily have to be huge endeavor, but a brick and mortar provides you with the opportunity to offer something that resonates with consumers more than any online discount code ever could—value beyond the transaction. Whether it’s exclusivity, a sense of community or eduction, some experiential examples include:
- Streetwear brand Bodega in Boston is hidden behind a literal bodega, accessible to only those who know how to get in.
- Molasses Books in Brooklyn lets customers trade books for coffee or other books.
- Reformation’s San Francisco brick and mortar space features touchscreen monitors which allow customers to scan through outfits. “When they find one they like, they can click on the size and it will appear in the dressing room, as if by magic.”
- Harry’s opened Harry’s Corner Shop, a “neighborhood barbershop”, which offers haircuts and shaves, as well as an assortment of Harry’s products.
- American Two Shot hosts art openings, music performances, shopping events, and pop-up shops.
Getting the word out
By the time that your brick and mortar space is ready, your marketing should be long underway.
Organizing and advertising for a launch party in your space before your grand opening is a great way to generate awareness; advertise online and around the neighborhood, and of course utilize the power of word of mouth.
For Zee Bee Market, Julio recalls: “The first thing I did, for the grand opening, was send press releases to as many news outlets as I could think of— radio, television, printed media, magazines; you name it. And inevitably two or three publications took interest.”
If you don’t have an Instagram for your brand already-create one.
Instagram is an incredibly powerful advertising tool on its own in terms of having a means to digitally portray your brand, but once you have a physical store, its power multiplies.
Try to have something “Instagrammable” in your store—the Samsung flagship store in New York features a hallway of screens that numerous customers take pictures in and post. Having an feature like this is a key way to draw customers back to your online platform. Some examples include:
- When Paintbox opened a brick and mortar location in New York City, the nail studio installed a custom manicure photo booth. In the first 2 years alone over 15,000 photos have been uploaded to social media.
- Paul Smith’s Flagship is on Melrose Avenue in Los Angeles. The storefront’s bright pink wall has garnered 28,728 posts (and counting).
Your grand opening should also be advertised on all social media platforms and via local outlets like flyers, including an incentive like free refreshments or a discount etc.
There are several molds that fit the brick and mortar expansion model.
Maybe your product would benefit from a three dimensional supplement to enhance its traditionally two-dimensionalized, glass screen portrayal.
Maybe your ecommerce business is thriving, but you feel that there is overflow of customer demand and have the finances to sustain the growth to a brick and mortar space.
Maybe you feel that your website needs a significant marketing push.
As Sam from Batch told us, “a physical presence is a great tool for marketing,” especially when your advertising budget is limited. Taking the time to carefully outweigh the advantages and disadvantages unique to your company and product, and following the advice laid out here, will help you decide whether or not to try for a brick and mortar success story.