When considering the implications of online retailers moving into traditional market places it is important to make the distinction between small scale businesses like Bonobos and Blue Nile that are discussed in Mark Walsh’s article “The future of e-commerce: bricks and mortar“, and corporate giants like Amazon. The scale between these two groups is not at all comparable so what is motivating them to open brick and mortar locations is logically not the same. For the purposes of this assignment I will be considering why a small online business would move into a traditional marketplace as a form of marketing and brand awareness.
One of the major concerns for any business is how to attract new customers and generally make the public aware of the company. Magazine companies are faced with this issue and an industry strategy is to use the presence of the magazine on the news stand to increase their visibility. Single issue sales typically account for a minimal amount of overall magazine sales so most of these companies are not making a profit off of having their issues available on the news stand. An average return or pulp rate for magazines is about 70% of the print run. Given these rates the profitability of employing a magazine distributor to put the magazine on news stands in major retailers is minimal however the visibility gained is an invaluable form of marketing. A similar business model is likely being applied with small online retailers. By having have physical brick and mortar location the online store is able to gain visibility and attract new customers. Seeing the company’s name when passing the location allows for potential customers to gain awareness of the name and become curious as to what the company is. Rather than getting lost amidst the crowded online retail space these stores are able to be found by customers in a given geographical location.
Etsy is a popular website that allows people to sell handmade goods in a small store within the website. While many stores can find moderate success just through search algorithms most are buried under the thousand of comparable stores. Etsy stores are also moving into physical spaces to gain visibility however these physical spaces are temporary. Craft sales are an event where many handmade good retailers come together to sell products and have existed for decades (not unlike brick and mortar stores), however there has been an increase in etsy stores attending craft sales. These etsy stores are able to sell products at these events however they are temporary markets. The hope of these etsy sellers is that by handing out business cards at these craft sales they will also increase traffic to their online stores.
Overall I don’t believe that online retailers moving into brick and mortar stores is a devolution because they are simply practicing a similar strategy that magazine companies have used for years. The intention behind these physical stores is not to replace their online store but to attract new customers and drive traffic to the website.