Online retailers draw in new customers by trading clicks for bricks
TORONTO - Two years ago, Zane Aburaneh took a leap of faith with his online business — and opened a bricks-and-mortar store.
"I was scared," said the 31-year-old, whose store, Zane, is located on trendy Queen Street West in Toronto.
"I started this business by myself with very little budget, so I had to be really careful with where I spent my money."
At the time, Aburaneh was in a predicament. The sales he was generating through his online store, which specialized in women's handbags, were not only unpredictable — but paltry. But two successful pop-up stores he held to generate online business showed there was strong interest in his chic goods.
In the end, the former handbag specialist with upscale retailer Holt Renfrew, decided to open a permanent shop along with his online store.
While it's not the traditional route for e-commerce businesses, retail consultant Wendy Evans said she's is seeing more digital storefronts opening conventional stores.
"It gives them (online stores) a bit more credibility for customers to see a store," said Evans, who heads Evans and Co. Consultants Inc.
"It's a chance to showcase your merchandise; gives your customers a greater sense of trust and builds your brand."
For some online retailers, attracting new business with a storefront can outweigh the added costs of physically opening the doors, such as hiring staff, stocking the shelves, and paying rent, she said.
For Aburaneh, expanding from digital commerce to cash register sales was less difficult as he had already tested the idea with the pop-up stores.
"I did more business in my first three-day pop-up than I did in my first six months online," he said. "People were beginning to pay attention and appreciate my store. I just wasn't getting that big of a response online."
Aburaneh said potential online customers weren't familiar with his brands from Paris and Milan, making them reluctant to drop $900 on a purchase.
"Not knowing a brand, they have to see it, feel it, touch it and also that assistance from someone in person is invaluable," he said.
It was a slightly different set of circumstances that pushed Canada's largest online optical store, Clearly Contacts, to open its first stores last summer.
The glasses and contact lenses e-retailer launched two storefronts in Vancouver in the past few months and is now working on a Toronto location. The company, which began in 2006, expect to have 10 stores open across the country by the end of next year.
Chief executive Roger Hardy said the stores, which are small locations of about 1,000 to 1,200 square feet, are mini-showrooms designed to introduce the company's products and services to customers who may be hesitant to buy online.
Hardy said the company currently processes up to 9,000 orders a day and, last year, recorded revenues of $225 million.
"The reality is that we're doing this to be complementary," he said. "There's something to be said about standing face-to-face with customers live and in-person."
Marketing professor Kersi Antia said it may not be financially viable at first for small startups to consider opening storefronts. But it can be almost essential if they want to grow their business.
"It's almost the necessary next step in the evolution of a company," said Antia, a professor with the Ivey Business School at Western University.
"While there isn't a stigma of being a pure-play online retailer, there is a certain credibility of having a foot in both worlds."