Home – New Forums Starting your journey Should I open a physical shop besides an e-commerce?

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  • #987820
    Qinnie(OzFairTrade)
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    Hi guys, I would love to hear your advice. My start-up ecommerce based charity Oz Fair Trade has been operating online for more than 12 months. I sell mainly handicrafts, and growth has been slow. Occasionally I do weekend markets, and I can probably sell around $300 worth of stocks in a day. Now I’m toying with the idea of opening a physical shop as well as keeping the online shop. I can get a 30m2 shop in a central location for about $20,000p.a., and I am hoping to get $200 sales each day.

    I can’t give up my current full time job, so I will have to rely on hiring or volunteers to run the shop. What I hope it will achieve is more people to know about the business and quicker turn-over of stocks so that more people in the developing countries can benefit from fairtrade. However, I am concerned that this will turn out to be a financial disaster and a distraction from running the e-commerce. If I have to pay wages, then the shop might not even achieve break-even. Does anyone run both a physical shop and an online shop? What’s your advice?

    #1164439
    Jenny Spring
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    Qinnie(OzFairTrade), post: 190274 wrote:
    Hi guys, I would love to hear your advice. My start-up ecommerce based charity Oz Fair Trade has been operating online for more than 12 months. I sell mainly handicrafts, and growth has been slow. Occasionally I do weekend markets, and I can probably sell around $300 worth of stocks in a day. Now I’m toying with the idea of opening a physical shop as well as keeping the online shop. I can get a 30m2 shop in a central location for about $20,000p.a., and I am hoping to get $200 sales each day.

    I can’t give up my current full time job, so I will have to rely on hiring or volunteers to run the shop. What I hope it will achieve is more people to know about the business and quicker turn-over of stocks so that more people in the developing countries can benefit from fairtrade. However, I am concerned that this will turn out to be a financial disaster and a distraction from running the e-commerce. If I have to pay wages, then the shop might not even achieve break-even. Does anyone run both a physical shop and an online shop? What’s your advice?

    Hello Qinnie

    If your goal is to spread the word of your business, why not take the $20,000 and use it for effective online advertising and SEO – specifically content marketing. If a client gave me a $20,000 budget, there is a mountain of digital marketing that I could execute, which would give you national as well as international exposure.

    Opening a bricks and mortar store will allow you to reach into a geographical area. However, you are still going to need effective marketing to drive people to that location. And then you have all the overheads with staffing and so forth.

    I’d say — NO – don’t do it if your goal is to build a expansive reach.

    Jenny

    #1164440
    MatthewKeath
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    Hi,

    I say go for it!

    I believe the future of retail is OMNI channel, and bricks and mortar is still a great way to get sales, and increase your credibility.

    http://www.smh.com.au/business/retail/omnichannel-retailers-cashing-in-20140401-35vlf.html

    #1164441
    Qinnie(OzFairTrade)
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    Hi Jenny

    Up until one week ago, my thoughts were exactly the same as yours. Why not spend that money on marketing? But there are two basic flaws in that argument. First of all, there is no guarantee that marketing will bring sales, whereas foot traffic will bring at least some sales. Secondly, having a physical store is also a form of marketing for the online store, so it helps to reduce the marketing budget required for the online store. Therefore I am tempted to give it a go.

    Thanks Matthew for your encouragement. I also found an interesting article written by a Fair Trade shop owner about struggling with their online store while having pretty good sales at the physical store. (http://ecommerce.shopify.com/c/ecommerce-marketing/t/sales-in-physical-shop-but-low-sales-online-advice-155553) This makes me think that perhaps I should give it a go.

    The other option is to keep doing weekend markets. The rent is cheaper, but there is limited space for display, and it’s only on weekends.

    Thoughts?

    Qinnie

    #1164442
    MatthewKeath
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    Qinnie(OzFairTrade), post: 190291 wrote:
    Hi Jenny

    Up until one week ago, my thoughts were exactly the same as yours. Why not spend that money on marketing? But there are two basic flaws in that argument. First of all, there is no guarantee that marketing will bring sales, whereas foot traffic will bring at least some sales. Secondly, having a physical store is also a form of marketing for the online store, so it helps to reduce the marketing budget required for the online store. Therefore I am tempted to give it a go.

    Thanks Matthew for your encouragement. I also found an interesting article written by a Fair Trade shop owner about struggling with their online store while having pretty good sales at the physical store. (http://ecommerce.shopify.com/c/ecommerce-marketing/t/sales-in-physical-shop-but-low-sales-online-advice-155553) This makes me think that perhaps I should give it a go.

    QinnieIf you do do it, please keeps us informed of your progress. It would be fascinating and a great lesson to others.

    #1164443
    LucasArthur
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    Hi Quinnie,

    Great post.. and a little off from FS as most FS’ers tend not to be retail centric from what i have seen.. and are based purely online….

    What i would say is GO FOR IT.. i am a strong believer that retail AND online merge a great idea and create a double opportunity that could potentially bring more than double the rewards.. Reason = people that will walk in could be converted to online + retail shoppers and local online shoppers may see something online they like, come in and potentially add additional purchases to their initial idea meaning extra sale..

    It is not going to be ‘perfect’ although you will capture the 2 main segments of the market of online and retail (bricks and mortar).. Especially if you have foot traffic :)

    There are still 2 types of buyers of physical products, those that are comfortable buying online and comfortable with quality (most online buyers though, IMHO, are bargain shoppers) from ecommerce and then there are those that still like the old way of satisfying those other 3 important buying tools: Sight, Touch and Smell… the tangibility that online cant bring :)

    Allow me to back this up with a little info.. we run online AND a sort of store, although we have no foot traffic but we service those that wish to inspect prior to purchase to satisfy that the quality, item etc etc is exactly what they want.. In fact, some even simply come in to ensure we are real !!!!!

    Again, go for it! if you can back it, afford it (or the charitable side can) just do it and i am sure it will be a success if you drive it the way you express it…

    Good luck, keep us in the loop i would LOVE to know how you go…

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1164444
    LucasArthur
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    MatthewKeath, post: 190288 wrote:
    and increase your credibility.[/url]

    Howdy Matt,

    Mate this is AWESOME advice to anyone listening/reading… product can drive this to be a higher priority, although i believe that the bricks and mortar (even if the people do not visit) improves your credibility significantly.

    After we moved from a warehouse with no showroom to one with, we found our turnover increased significantly. I am not quoting figures as they will be quite distorted because some of it would be organic from product growth and longevity in the business + repeat customers etc etc although the visit rate of customers went from 1:20 to maybe 1:10..

    Cheers
    Jason

    ps.. sage advice young man :)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1164445
    MissSassy
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    Hi Qinnie

    Make sure you do your homework as to just how much foot traffic you expect to have. Perhaps site outside and count the number of passers by and speak to nearby shop owners.

    Your rent is cheap – ensure you can pay it, power, phone and your staff member, even if you sell nothing all week.

    Just a couple of notes but the more you plan the better you will go. It is tricky to just open a store and hope they will come, you will still need to market the business too.

    There is lots to consider so just be wise and don’t get caught up in the excitement of a store front.

    #1164446
    Qinnie(OzFairTrade)
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    Thanks a lot Jason for sharing your personal experience. I totally agree that having a physical store adds credibility. I also suspect that handicrafts sell better through touching and feeling.

    I found two shop fronts that I’m interested in. One is in the city $40,000 p.a., the other is in a touristy outer suburb $18,000 p.a. and I’m tossing between the two. The one in the city definitely has more foot traffic (I suspect more than double the foot traffic of the other) but it is more risky if the venture fails. I am a risk taker so I am inclined to go with the city one. What’s your advice?

    #1164447
    MissSassy
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    Sounds like you need to do an old fashioned pro’s and con’s list.

    Also think about your clients – are they in the city 7 or 5 days a week are they tourists 5 or 7 days?

    #1164448
    Qinnie(OzFairTrade)
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    Thank you all for your good advice. I agree that I need to plan better before taking this step. It’s a big financial commitment. Agent said that minimum lease is 3 years. Could I possibly negotiate for 1 year?

    I’m also thinking that because one of the main objective is to bring people to the online shop, so tourists would be a better choice for me than locals, because they will help to spread the word. Plus the rental is halved. Your thoughts?

    #1164449
    Anonymous
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    Hi Qinnie,

    Please do factor in the length of the lease when making your decision about opening a retail outlet. My understanding is that if you end up not making as much as you think, you may still be liable for the rent for the duration of the lease – and of course the costs of running a store aren’t just the rent… you need to think about lighting, display, insurance, and many other things too.

    Something you haven’t mentioned is whether there’s a possibility of wholesaling your products to other retailers. I’d investigate that option before you commit to a lease too. (JennySpring is very experienced with that and may be able to offer you some advice).

    Good luck,
    Jayne

    #1164450
    Qinnie(OzFairTrade)
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    Hi Jayne, you are right that opening a retail shop is not simple. There are a lot to think about. I currently have two consignment arrangements and I’m actively seeking more. It’s definitely a great way to get exposure and increase turnover, without the financial commitment of a retail lease. On the other hand, direct retail allows me to better connect with every customer. 3 years is a big commitment. I will be more willing to give it a go if there’s shorter term leases around. I will keep exploring my options. Surely given the current budget Canberra land owners are more willing to negotiate?

    #1164451
    Tony Manto
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    Hi Qinnie, all I would like to add, is try and get a short term lease or a lease you can get out of. You don’t want to sign up for 12 months then find that it isn’t working.

    You could also try and sub-lease some space in an existing non competing business. This way you can test and measure if what you are thinking can really work.

    Just be careful with your numbers. its never as good at you think. Work on the 80/20 rule. What every you think it is, I would calculate on 80% of the figures you calculate.

    #1164452
    MatthewKeath
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    Could you have a pop up shop?

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