With spiraling rent and utility costs, running a physical business is harder than ever. As the digital world is now our everyday place for purchases and services, business owners may be tempted to shut up shop completely and head online. But is going digital everything it is cracked up to be? We dive into the pros and cons in the article below.
The Advantages of Moving to an Online-Only Business Model
Moving a business solely to an online forum can save money. If you don’t have to fork out for expensive premises, you cut back on overheads. Of course, many businesses will still have to pay for inventory storage and office space. However, this can often be a lot less than combining it with a retail space. You don’t have to operate on an Amazon level to be successful online.
This can even translate into lower fees for customers themselves. A prime example of this is the modern wave of online estate agents, such as UK-based We Buy Any House. Operating as an online service, they are able to provide flexibility and speed with quick cash offers. Prices they quote are not eaten up by further costs, such as agent fees. They are not alone when doing this. Look at any insurance comparison site, and you will see that the most competitive quotes are often provided by digital-only services.
The Cons of Moving to an Online Business Model
Moving your model to the online realm can hurt your brand identity. Without a physical shop front, you may start to become a faceless company. There is also a tactile advantage to having a store: People can come into the shop and touch or try the products. This is not possible when you are only operating online.
To counteract this, you have to put a lot into your digital marketing efforts. You will now be one of thousands of similar businesses in a very crowded online marketplace. Digital marketing is a full-time job in itself, so it is advisable to hire people to do this and social media for you. Even then, it will take something very special to help you stand out from the crowd. You may also need to develop an app or improve your website, which can also cut into funds.
Final Considerations to Make
It is also not unknown to have a hybrid approach. The clothing brand Lucy and Yak is a great example of an independent retailer that has just one physical location, built from an online presence. Perhaps you could consider upping your online presence and then moving to cheaper premises?
The final consideration is to decide if it really is worth it. Will the business and brand identity you lose be worth the money you save by not having a physical location? Weigh this up against the need for an increased online presence and competition. Even then, you may not know if it is worth it until you launch. Speak with customers and others in the business, then decide if it is really for you.
