A few years ago, it seemed like the advent of e-commerce might signal the beginning of the end for brick-and-mortar retailers. However, the recent trend is for e-commerce companies to open physical storefronts to bolster an already-successful business.
Online phenomenons like Rent the Runway, Birchbox and Bonobos have established in-person locations in New York City.
"The thing we worried about most was the profit margin we would be able to generate from the physical locations," said Rent the Runway co-founder Jennifer Fleiss. "But what actually turned out to be the case is that both revenue and average order size in store is substantially larger than [online.]"
The advantages of having a customer shop in person seem to outweigh the cost of renting a showroom and hiring staff. Fleiss believes this is because shoppers have a much more pleasurable experience of the product at the brick-and-mortar location, where they have employees to help them and merchandise to touch.
As a result, salespeople can suggest additional products the customers might enjoy and prospective purchases are made much more attractive by the fact that individuals can leave with their new items in tow.
Over the past few years the abandonment rate of goods in online shopping carts has consistently increased, and is now over 70 percent. Online vendors theorize that this is due to slow shipping times, whereas the instantaneous nature of a brick-and-mortar purchase encourages more impulse buys.
"We've found that are stores are the flip of our site: our site is about two thirds repeat customers while the store is about 70% new business," Bonobos founder Andy Dunn said during a panel conversation last week.
Increasingly, it appears that the wave of the future will be a close partnership between online and in-person retailers. Whether your business operates online or in-person, it's crucial that you employ credit card processing software that you trust to handle your inventory and transactional data across multiple channels.