Many were probably surprised when e-commerce frontier company Amazon decided to enter the world of brick and mortar in November last year, when the company opened a book store in Seattle. According to an article in The Guardian, the e-retailer’s choice of entering the real world might however just make perfect sense.
The Guardian has counted "20 or so" e-commerce businesses that have opened physical stores over the last few years, usually in order to promote themselves and their products, and of course to come closer to its customers and making them buy more online. Prior to Amazon, businesses like Warby Parker, Bonobos, Birchbox and Casper have all complemented their online offering with traditional brick and mortar stores.
- It’s very hard to launch a brand these days that’s just online-only. It’s an incredibly difficult and crowded e-commerce environment, said Sucharita Mulpuru, a retail analyst at Forrester Research to The Guardian.
Millions on Paid Search Listings
According to Sucharita Mulpuru there are more than 800,000 online stores that are trying to get attention through Google, a way of reaching out that is becoming more expensive day by day. For example, Macy’s and Nordstrom are said to have spent an estimated $6.4 million and $4 million in paid search listings for apparel-related keywords in the first quarter of 2015, according to a report from research firm L2 Inc.
- Clicks disproportionately go to the highest-placed search ads, with little room for differentiation, states the L2 report.
Apart from helping e-commerce sites attracting customers, the stores are obviously beneficial when it comes to selling for example jewelry and eyeware, since it often is much easier to provide customers with service. Several brands have according to The Guardian’s article discovered great benefits from opening flagship stores in trendy neigborhoods. That is the case for Warby Parker, which opened its first store in Soho, New York, a couple of years ago. Now the seller of eyeglass products has 20 stores across the US.
- We see a halo effect where stores themselves become a great generator of awareness for our brand and drive a lot of traffic to our website, as well and accelerate our e-commerce sales, said co-founder and co-chief executive Dave Gilboa to The Guardian.