Imagine you want to start your own company. You have an idea of what products or services you’ll offer. You have the necessary capital.
However, you’re not certain whether you should have an eCommerce business model or whether you should open a brick-and-mortar store. Either option can be profitable, but there are positives and negatives that go with each one.
To help you decide, let’s discuss four key differences between these business models.
Some Products and Services Are Regarded as Higher Risk
First, you should understand that some industries are regarded as inherently more risky than others. For instance, smoking or vaping products fall into that category. So do money lending or gambling.
Because of how these industries are regarded, it may be easier for you to establish a presence with them online versus attempting to offer them through a brick-and-mortar location. For example, maybe you’re trying to sell smoking products, but you live in a city that frowns on that. Setting yourself up with an online business where you can secure high-volume merchant accounts is probably advisable.
With eCommerce, There’s No Foot Traffic
That being said, if you decide on an eCommerce business model, there’s no foot traffic. Having walk-in customers that discover your new business can be a way to generate revenue if you have a physical storefront. You remove that revenue stream with an eCommerce model.
That needn’t be an impediment, though, provided you run an aggressive marketing campaign that attracts interest in your products and services. Partnering with an influencer or going viral with your marketing on social media can easily counteract the loss of foot traffic.
eCommerce Lets You Get as Big as You Want
With eCommerce, it’s also noteworthy that the entire internet is your potential customer base. You’re not limited geographically like you would be with a physical storefront.
With a brick-and-mortar store location, or a small chain of them, you’re presumably limited to whoever walks through your doors. That isn’t an issue with eCommerce. You have access to tens of millions of potential customers. It just becomes a matter of attracting their attention.
With eCommerce, There’s Virtually Limitless Competition
There’s a flip side to having so many possible customers online, though. If you open a physical vape shop in your city, you’re probably only competing with other vape shops in the area. In a sense, this makes it easier to dominate the competition, provided you have competitive prices, a good selection, and everything else that makes a store successful.
If you go with an eCommerce business model, you have nearly endless possible customers, but you’re also competing with every other company online that offers similar products and services to yours. Yes, you aren’t limited geographically, but you’ll have many more rivals competing for your market share.
Consider all of this carefully before proceeding any further. Neither eCommerce nor having a brick-and-mortar store location are necessarily better. It’s more a matter of what you think makes the most sense for your unique situation.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
