The beauty of online commerce is that new businesses can launch with very little capital, then use online marketing tools to expose their brands to potential customers across the country. But more and more online retailers are discovering the potential advantages of adding brick and mortar to the business model. Amazon made headlines by opening its first physical store last November in the University Village shopping mall in Seattle. A second location is in the works for San Diego, with potentially many more to come.
Online retailers both large and small have been making the same move for quite some time. That’s partly because, despite the popularity of shopping online, some customers still prefer to shop in physical stores. By building brick-and-mortar stores and even pop-up locations, retailers can give potential new customers a more traditional, tangible shopping experience – whether it’s browsing books, trying on neckties, or sampling beauty products. Those customers may then be more willing to convert to an online shopping experience.
Online retailers can also leverage the valuable customer data they have captured through browsing behavior, product reviews, and other online interactions to help improve the offline shopping experience. For example, Amazon uses online book ratings to create displays of current popular items, and they’re able to integrate your offline purchases with your Amazon account at checkout.
MicroVentures portfolio company and men’s clothier Bonobos originally turned to brick and mortar four years ago, setting up storefronts called “guideshops” that allow customers to try before they buy. This business model has allowed Bonobos to convert street traffic into online customers, and given online customers a chance to “showroom” the company’s offerings before placing an order. The company now has 21 guideshops around the country, from Austin to Boston, including its newest location on Michigan Ave. in Chicago.
Birchbox is another MicroVentures portfolio company that is testing these waters. The company, which offers a monthly subscription to a box of beauty product samples, began by experimenting with a pop-up location. Building on that early success, Birchbox now has two shops, including a two-story flagship store in the SoHo area of Manhattan. Birchbox hopes the physical location will help the company reach profitability this year.
It may seem counterintuitive for retailers that were “born online” to pivot toward Main Street, given that each has found a customer niche and has developed a loyal following. But, as investors in these companies, we at MicroVentures hope that having physical locations will help to level the retail playing field, giving these young companies the opportunity to compete with big box stores and other national chains in ways they never could before.
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