The internet has completely changed the way people shop. Shopping used to be done on the high street, nowadays it can be done within a few clicks of a mouse in the comfort of one’s own home and the goods can be delivered as soon as the next day. The internet also makes price comparison easier, where one can compare the prices across thousands of vendors around the world to find the best deal, which can lead to significant savings over shopping on the high street.
The shift in shopping habit has changed the landscape on the high street too. There’s been a number of high profile bankruptcies amongst high street shops and the trend is likely to continue. What this means to retail entrepreneurs is that it is time to reconsider the way retail business should be done and the best opportunities may lie online.
Setting up an online business is significantly easier and cheaper than setting up a physical store on the high street. There is no expensive lease to negotiate and lengthy renovation to undertake, the entrepreneur just needs to register a domain and erect a well designed website, which can be done within a matter of days at a fraction of the cost of securing and refurbishing a high street store. Whereas a high street store will require the entrepreneur to hold relatively amount of stock to fill the shop floor, a virtual store does not. This makes possible for the entrepreneur to employ a just-in-time supply model to minimize the amount of capital tied up in stock or even employ a dropship model to eliminate the cost altogether.
Once the website is ready, the entrepreneur needs to invest significant amount of effort and money into its promotion, which breaks down into online promotion and offline promotion. Online promotion involves paying for advertising and optimizing the website for search engines so they will appear in the first few pages on major search engines for the keywords they want to target. Websites that appear on the first page of search engine search results can usually receive hundreds of visitors every month without the entrepreneur spending any money on advertising. Offline promotion is about capturing the mindshare of people the entrepreneur wants to target and making them more aware of the website and the company’s brand. It could mean traditional marketing methods such as leaflet distribution, traditional media advertising and publicity drives.
The minimal cost required to maintain an online shop means the profit margin is usually much higher compared to traditional high street store. It means the entrepreneur can invest more money into customer service to make the virtual shopping experience more personal and more convenient for the customers.