Ask an expert: should I go online?

Last updated 10:42 01/07/2013

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Q: I want to open a shop but everyone keeps telling me to go online. How do I find out which option would work for me?

A: A physical shop and an online shop are two completely different business models. Each have their distinct costs and benefits, and will suit different propositions.

An exclusively online shop will give you unlimited reach in terms of customers, but into a very crowded space, so to get visibility you will need to be unique, well-differentiated or have some very smart search engine optimisation strategies. This is becoming more ubiquitous for standard offerings and products that can be assessed and purchased comfortably remotely. Some extremely successful retail businesses operate exclusively online.

However if your products are more technical or complicated, or you have a market niche that is not online savvy or requires more engagement in order to make a purchase, having physical premises can be the necessary first step. The physical constraints of premises and the associated costs are things to take into account when looking at this option.

Developing an online footprint for your shop is important though, with the absolute minimum being a professional website with a good overview of what you sell, how you work and who you cater for. In a world where customers typically search online before they purchase anything, even if they are standing outside your shop, having that online presence is a must.

How far you develop any online element will depend a lot on your point of difference. If you are selling commodity products, being online is probably critical, making access to your products as easy as possible. If your products lend towards an experience, or are high end or luxury, there may be great value associated with the retail experience, i.e. being pampered by shop attendants or the experience of visiting a shop. Equally, if your products require an element of fitting, customisation, or explanation, having a shop where people can ask questions and try before they buy can be the difference between a purchase or not.

Still, every day new online technology is being implemented to deliver the experience or personal customisation service through the web, and it is only a matter of time before virtual shops can do largely the same job as physical ones.

Nick Churchouse is venture manager for Creative HQ, Wellington's start-up hub.

A: Bricks and mortar retailing is a very high-risk business, not for the faint-hearted and inexperienced retailers. There must be a solid reason as to why your customers need to come into your store, versus just shopping online. Work out how you will differentiate yourself against and co-exist with online completion - then test that logic with some potential customers in your target market.

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Experienced retailers can still make good money, but they need to be top of their game and continually innovate.

If you choose the online option, start with a low cost online store and plan on replacing it within the first 12 months of operation, if its successful. Get a techie on your team (even part time) so you do not get fleeced by website developers who take no risk.

Mark Robotham is a small business expert, www.growthmanagement.co.nz

- BusinessDay.co.nz

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