From Click to Brick: Ecommerce Redefines In-Store Retail
What's old is new again for some ecommerce retailers.
After bowing to the realization that customers often like to see items in person before buying, a growing number of online retail companies are setting up physical stores, while at the same time redefining what brick and mortar means for them.
"The single biggest reason people don't buy online is that they want to touch and feel merchandise," said Sucharita Mulpuru, a principal analyst at Forrester Research. "A store helps to resolve that issue, at least for the people who live near that store."
In essence, these retailers are trying to turn showrooming, or when consumers visit physical stores only to later buy items online, from a negative to a positive for their bottom lines.
"If there's one thing showrooming teaches us, it's that consumers still want to see what they are buying in person—whether it's checking the fit of a pair of pants or judging an items' quality—so naturally, e-tailers are deciding to set up physical stores," said Jill Puleri, vice president and global retail leader at IBM.
Data backs up the interest in establishing physical stores. According to IBM, 50 percent of online sales were generated after consumers first browsed online. Still, more than eight out of 10 shoppers made their purchase in store, underscoring the continued importance of physical retail locations.
"Click-to-brick" stores typically fall into of two categories: temporary pop-up stores meant to stir up publicity, such as those launched by Etsy and Birchbox, and permanent showrooms, including ones run by Warby Parker and Bonobos. These permanent locations sometimes do not even have items for sale, thus eliminating the need to carry inventory or invest in a large, expensive retail location.
When he first launched menswear retailer Bonobos, Chief Executive Andy Dunn was wary of the brick-and-mortar concept.
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"We were wrong at the beginning," he said. "In 2007, we started the company, and we said the whole world is going online only. All we're going to do is be online."
Since then, the company rolled out their version of the in-person retail store in several locations. The stores are focused on service and do not carry items for sale.
"We think that ecommerce is going to be the flagship store and possibly as much as half of retail for any brand," Dunn added. "But what we've learned recently is that the offline experience of touching and feeling clothes isn't going away. People still want to try stuff on, and so for a brand like ours that's built on fit we want to provide that."
For e-tailers that decide to venture into physical locations, analysts listed several benefits inherent in their business model.
"The advantage they have is that they are omnichannel from the start—they don't have to invest millions in retrofitting their systems to accommodate the web channel," Mulpuru said.
But because their core business is online, it's not always easy also to launch a store, which requires a focus on visual merchandising and a different labor model, she added.
Still, IBM's Puleri said ecommerce stores have the luxury of being nimble since they can change assortment and price on the fly online. But the brands must figure out how to keep their brand in sync across the various channels, she added.
—By CNBC's Katie Little; Follow her @katie_little_
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