A Return to Retail

Multiple Channels

Among the reasons for a dotcom to open a physical store, one in particular stands out: It gives your customers more chances to interact with you.

"Ultimately, the more points of presence and the more distribution channels you have, the better chance you have to play an important role in a consumer's purchasing behavior," says Elaine Rubin, executive director and chair of Shop.org, a trade association for Internet retailers.

Moreover, having multiple channels increases your chances of obtaining loyal customers-something most pure-play dotcoms fail to establish. According to Rubin, "Customers who are engaged with a retailer in more than one channel usually have greater average sales and greater customer loyalty to that particular retailer."

Another plus: Having physical stores gives dotcom retailers a greater opportunity to acquire new customers. "One of the biggest challenges dotcom companies have is capturing or acquiring customers at a reasonable cost," says Chris Merritt, a principal at the Atlanta office of New York City-based retail consulting firm Kurt Salmon Associates. "Owning a store, however, offers a natural traffic flow into and out of the store, which allows an entrepreneur to gather names and begin direct-to-consumer marketing programs, advertising [either] the site or the store."

Perisano agrees. "The cost of acquiring customers online is going to make any pure-play business model extremely difficult, if not impossible," he says . "It's always easier to drive people to your Web site if you already have stores."

Physical stores also give your customers a more convenient way to return goods and try out products-two options analysts say are sorely missing from Net stores.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the September 2001 print edition of Entrepreneur with the headline: A Return to Retail.

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