Selling: Online plus brick and mortar

Sales of products online continue to grow. Last year, online revenues grew about 17 percent in the U.S., but still only accounted for about eight percent of overall retail sales.

At the same time, the giant online retailer Amazon has ventured into the brick-and-mortar world by buying Whole Foods. It also recently opened its first convenience store, Amazon Go, in Seattle.

From the other direction, Walmart is acquiring online brands, such as, ModCloth, Bonobos and Moosejaw. Walmart’s digital sales rose 50 percent in the United States the last quarter of 2017.

It has become evident from these changes being made by these companies they believe they need to be in online and traditional brick-and-mortar retail formats. Recent academic literature supports this theory.

Even with these changes by the large retailers, many experts suggest smaller brick-and-mortar firms need to have some kind of online presence. Most suggest selling online in addition to just engaging in digital promotional efforts.

It makes sense for all retailers to be doing some kind of marketing online, according to Danielle Foster, associate professor of marketing at Tiffin University. “A strategic online marketing campaign included in a well thought out, integrated marketing communications plan will help small retailers drive traffic and trialability without a large investment of marketing dollars.”

However an organization chooses to enter the ecommerce landscape, decisions need to be aligned with the company’s core values and brand promises. Successful online retailers have become masters of approaching experiences from their markets’ perspectives because they truly know their individual needs and wants.

Finding the right niche in the market is a key for smaller brick-and-mortar firms as well as online. It is not practical for a small company to try to compete in all product categories against behemoths such as Amazon and Walmart. A niche market is when a firm aims its products at some smaller subset of a market that often is not practical for larger firms to target.

Foster continued, “Finding your target market and speaking directly to them has never been easier than in current times. If retailers have a good idea of who their top three customer segments are, they can easily incorporate targeting online and mobile marketing strategies that will drive revenue.”

Value is another key factor. Local stores typically cannot compete on price with the big online retailers. As a result, it is critical to convince consumers they are offering a product that provides for more benefits to them at the price they are charging.

Ralph Smothers, owner of Ralph’s Joy of Living in Tiffin, said he is learning how to integrate online selling into his marketing mix. With his bigger competitors going digital, Smothers said, “I have no choice but to study and learn the new age of advertising.”

As more customers shop online, delivery has become one of the last reasons for people to not do more buying this way. Uber-like delivery services also are being tried by retailers. Finding more efficient delivery methods could be another possible competitive advantage for smaller firms.

Overall, it takes fewer people to staff online retailing as it does brick-and-mortar stores. The percentage of new jobs in online retailing is increasing, but overall, more people were hired by brick-and-mortar stores than online e-stores.

Smothers said even though customers are educated online before they walk into a brick-and-mortar store, “a huge percentage of buyers still want the experience of seeing, touching or tasting a product before they buy.”

It will be interesting to observe over the next few years how the balance between online and traditional brick-and-mortar stores is achieved for large and smaller firms.

Perry Haan is professor of marketing and entrepreneurship at Tiffin University.

He can be reached at (419) 618-2867.