The rapid progression of mobile technology over the past two decades has changed the way people shop. Last year, a report released by Mintel revealed that nearly 70 percent of people shopped online at least once a month in 2015, which is a staggering number when you consider that online shopping did not truly take off until 1995. If you are a budding entrepreneur, these statistics may make you wonder if opening a digital business would be more successful than a physical one. While each has its merits, there are several factors you can consider before making your final choice.
Consider Your Customer Demographic
The first factor you should consider when choosing between a digital or physical business is who your customers will be and how easily they will be able to access your products or services. A few questions you may want to ask yourself include whether people who live in the same town or city as you are looking for what you have to offer and whether other businesses that sell similar products already exist in the area.
For example, if you want to open a shop that sells different kinds of homemade candy but there are already several chocolate shops open within a few blocks of a prospective location, competition may be fierce. However, if the location is excellent in terms of visibility and you cannot pass it up, a clever and original marketing ploy both locally and online might help you stay afloat during that difficult first year.
Many small business owners start their companies online because it is less costly and then later, when they become successful, open physical locations. One successful example of this type of business tactic is Amazon’s foray into opening brick-and-mortar locations after building an online shopping empire that is used by millions of people every day. While your business may never grow as large as Amazon, comparing costs at the outset may help you see which choice is better for your financial bottom line.
If you have limited capital, you may want to consider a few advantages that opening a digital store can offer. For example, buying and registering a domain name can be considerably less expensive than buying or renting a physical space, and a website will probably be less expensive to maintain as well, especially if you are tech savvy and will be able to so on your own. However, you may want to consider opening a physical location in the future if your digital venture turns out to be successful.
Potential for Growth
While any business, digital or physical, has the potential for growth, considering which one you can grow more quickly may help you decide which is the right choice for you. Some businesses, such as Hampton Creek, offered their plant-based food products online while using digital marketing campaigns and social media to raise awareness about them before they rolled out into local grocery stores. This type of blended business model may be a viable choice for you if you have limited capital to launch your company.
Some physical locations have an excellent potential for growth, so this possibility should not be counted out completely. One way to enter the world of brick-and-mortar entrepreneurship with less risk is to purchase a franchise. These businesses usually already have a local presence, a standard business model, and allow you to grow the number of locations you own without having to worry about marketing or managing a website, both of which are typically handled by a corporate office.
The Possible Future of Retail
One important factor when choosing between a digital or physical retail business is how technology may continue to change the way consumers shop. While you cannot predict the future in certain terms, keeping track of shopping trends may help you get some idea about which way the winds are blowing. As you develop your business idea, track these trends and compare how the changes they could bring might affect it. If you unsure of how to decipher market trends, seek out a mentor who can help you make sense of it all.
Starting your own business can be quite a challenge, especially when you must decide whether a digital or physical location will help you be more successful. Carefully weighing the pros and cons of each and then applying them to the business goals you hope to achieve can help you make the best choice and put you on the path to success.