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Online and offline retail aren’t rivals: they are two sides of the same coin

by Mike Mack|
05. 31. 2017
|

Retail

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The buzz.

The buzz that sends fear into the hearts of retailers, suggesting that online shopping has come to replace offline, and there is no turning back.

Indeed, internet allows customers to order anything from diapers and soda to perfectly fitting clothing and even gardening tools without leaving the comfort of their homes, so why would anyone bother visiting a physical store while dealing with traffic jams, long travel times (and a dozen of other obstacles) to buy the same stuff?

But then…

In 2015, Amazon opened its first brick and mortar store.

In 2016, online retail giant Amazon – the nightmare of all bookshops around the U.S. – already had 21 fully operational brick and mortar stores and plans to open 80 more by the end of 2017.

In 2017, just a couple of days ago, PetSmart – one of the biggest pet food suppliers in the U.S. – bought Chewy.com (an insanely popular and one of the fastest growing e-commerce websites in the world), which is referred to the biggest e-commerce acquisition deal ever made to date.

Why does Amazon, one of the biggest and most successful e-commerce websites in the world, choose to go offline?

Similarly, why would a $8.7 billion valued company buy an e-commerce website for 38.5% of its total value?

Because when it comes to retail today, no matter how big and successful you are, no matter how many customers you have and how fast you are growing, online and offline retail cannot exist without each other – they are the two sides of the same coin.

Let’s go deeper.

The intersection of online and offline retail

Both online and offline retail have their benefits.

Offline retail is all about customer experience, building trust and engagement, and educating them on new and existing products. The last bit is the primary reason why Apple stores are always packed with visitors – they are not intended to sell.

Rather, the stores serve as gigantic 3D catalogs armed with helpful employees, and are meant to educate customers, make them want the new gadgets. Whether customers choose to shop online or offline afterwards doesn’t matter – the stores do their job extremely well.

Online retail is about convenience, time saving, and evaluating all possible choices quickly and easily. Indeed, if you know exactly what you want to buy, you don’t really need to touch and feel the product before the purchase, or any outside help – all you care about is getting the perfect deal with as little hassle as possible.

Online and offline stores have their uses for customers and serve as different mediums for delivering the right products to the right people at the right time.

What’s at the intersection of online and offline though? Where do those two meet eventually?

That’s right. Customers.

While the virtual world has become an inseparable part of our daily lives and accompanies us wherever we go, it is still a part of the physical world. Customers are still people living in the physical world, and influenced by their surroundings and other people.

Let’s recall the example above – PetSmart and Chewy.

From a purely business perspective, it’s just a retail chain buying another chain to increase market share in a given area (in this case, a virtual area).

However, the virtual doesn’t exist without the physical.

Bob, who prefers to shop on Chewy.com, is a real person who lives in a real home, goes to real parks and enjoy the time he spends with his real pets, just like Daisy, who prefers to buy her pet food at PetSmart.

Online and offline retail aren’t rivals – they need to complement each other. They are the two sides of the same coin, and one cannot succeed without the other.

To put it another way, there is no online and offline retail – there is just retail. For Bob and Daisy, online or offline are simply choices they make.

Mike Mack

Mike Mack

Mike is the Co-Founder and CEO at Fract. With over 20 years of retail and business location analytics experience behind his belt, Mike counsels business owners and helps them get the most out of their business and sales data. He is also a passionate art lover and enjoys a glass (or two) of good wine with friends and family on the weekends.

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by Mike Mack|
05. 31. 2017
|

Retail