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Online versus bricks-and-mortar: where will your business thrive?


E-commerce has surged, but don’t underestimate the humble retail store


The battle between bricks-and-mortar stores and e-commerce sites may not be as old as time, but it’s certainly a dilemma that’s plagued the retail sector while the internet has evolved.

Not even the stats do much to allocate a winner or loser. The e-commerce industry is in accelerated growth as the world enters its third year of the COVID-19 pandemic, with the global e-commerce market predicted to hit $5.5 trillion in 2022. However, last year, for the first time ever, sales flew out retail doors faster than virtual ones, with physical store sales growing at a rate of 18.5% versus 14.2% for online sales.

So, is there a right answer to the ‘online versus bricks-and-mortar’ question? In a recent survey, nearly half of respondents still prefer a physical retail experiences when given the choice, but we know customers also desire quick and easy customer service on multiple channels. It’s a juggling act that many retailers are tasked with balancing.


The answer to online vs bricks-and-mortar lies in your data

In Australia, online retail sales have grown significantly since the outbreak of COVID-19, much like the rest of the world. This boost in online customers saw online retail sales take more than a 15% share of the retail market by September 2021. 

Across the ditch in New Zealand, Kiwis are spending more online than ever before, with one report showing a 52% growth in online spending compared to 2019.

Although online marketplaces offer an infinite array of products, return rates are also three times higher than in-store, proving there are just as many barriers to entry for retailers wishing to develop an online presence as there are opportunities to expand into new markets.

Let’s explore how data analytics can be used to determine the viability of a shift to e-commerce:


Gain a deep understanding of the competitive landscape

The world of e-commerce is both an opportunity and a challenge for retailers. On the one hand, e-commerce provides a launchpad for businesses to expand their reach and customer base into emerging online marketplaces (including the rise of social commerce). However, building an online presence takes time and large online retailers continue to dominate the market.

Migrating a portion (or all) of your retail offering online really depends on:

  • Whether there’s a gap in the market you can fill
  • How saturated the online market is in your product or service niche
  • Ways to make your e-commerce offering different and more appealing than your competition


Evaluate current retail store performance

Identifying your best and worst-performing stores will help you uncover opportunities to either replicate that success in a new store or highlight locations that are no longer profitable – in which case, relocating that investment online (where there are lower overheads) could be a better strategic move.

The most important thing to consider here is customer experience. While a certain store might not be pulling its share of the business weight, that doesn’t mean that your customers will want to spend their money online – especially if the customer experience doesn’t hit the same high standard. It’s an important aspect you’ll want to nail down.


Predicting the success of a new store or online shop

While nothing is a given, there are ways – using your data – to assess whether a new store or growing your online presence is a smarter business decision. You can assess potential new sites for stores, project likely turnover in that region, predict cannibalisation from other stores and more. 

You can analyse historical data to answer these questions:

  • How many of my stores can this market support?
  • How would a store perform in this specific location?
  • Who and where are my most profitable customers?
  • Where are the gaps in my market?
  • Are my best opportunities for growth in bricks and mortar or in online?


Achieving retail success 

Retail is never set in stone. E-commerce is, without a doubt, one of today’s main avenues for retail shopping, but that doesn’t mean bricks-and mortar-stores are anywhere near obsolete – the relationship between them is often synergistic, and the choice ultimately will come down to where your competitive advantage lies and how deeply you understand your customers.


At Datamine, we have decades of experience helping retailers optimise their retail footprint and identify opportunities for growth, by uncovering insights that allow them to make sound, empirical decisions. Get in touch with us today.