Ecommerce retailers have a number of advatanges over traditional brick and mortar retailers in building stores. Online retailers, especially Amazon, have benefited from having local retailers effectively be their showroom so there was little need for them to build stores. How many times have you gone into a local store to check out the merchandise only to make the final purchase online in the convenience of your own home? However, as more stores close their doors, there are fewer ‘showrooms” available. With Borders closed and Barnes and Nobles downsizing, Amazon built their first brick and mortar bookstore in 2015 in Seattle in to meet shoppers’ need for a place to see, touch and experience the merchandise in person and to sell Amazon’s growing product line.
Online retailers have several advantages in opening new stores. They are established brands who already have a national presence with effective advertising campaigns. And they have a purchasing, warehousing and delivery infrastructure in place which can readily be expanded to support the growth of a brick and mortar retail expansion. Owning to their online success, online retailers also possess a tremendous amount of real data on their customers which allows them to be far more targeted in selecting retail locations that best serve their existing customers. They know their shopping patterns, their likes and dislikes, and can parley this information into well considered merchandising decisions and store locations. And once opened, physical stores attract new customers who will then shop with them online. It is a win-win.
It is interesting to note that many of the online retailers opening stores are niche players with a strong online presence. In addition to Warby Parker, Bonobos and Birchbox are Athleta, Blue Nile, Rent the Runway, Trunk Club and others who have ventured from pure online retail to building stores in multiple locations. They have capitalized on their strong online following by establishing successful stores close to their customer base that provide a more personalized service to their customers. Used as marketing vehicles, their new stores also create greater brand awareness and offer new opportunities to expand and grow their business.
What is becoming apparent is that retail has increasingly become a multi-channel experience. Existing brick-and-mortar retailers have sought to compete with online retailers by expanding their online presence. Now we are seeing the opposite trend with online retailers expanding into brick and mortar locations. Given the success of Warby Parker and others, expect to see more online retailers looking for retail locations in a neighborhood near you.