A Return to Retail

Getting Physical?

Of course, opening a retail store-or buying an existing one-brings significant challenges to someone who only has experience starting a Web site. "There are significant differences between running a store-based business and running an online business," says Rubin. "Staffing, customer service, inventory issues, real estate, leases-all these things could be fairly foreign to [a netpreneur who's] absolutely great at creating an incredible customer experience online."

Not to mention, opening a retail store is an expensive proposition. "You can spend, on average, $800,000 to open one store," says Merritt. "You have to pay for employees, the property and the inventory you put into the store-those are the three big buckets of cost."

For those of you who lack the funding needed to open a retail store right now, try renting a kiosk in a local shopping mall. You can even feature Internet terminals allowing customers to interact electronically with your Web site.

higher than estimated: the ROI from online ad campaigns, measuring branding value instead of click-rate metrics
Jupiter Media Metrix

"Kiosks have short-term leases, and they're not as expensive as a retail store to launch, but they allow you the opportunity to get your brand out there," says Merritt. "Kiosks also allow you the ability to measure demand and see whether or not consumers are interested in shopping with you. This information can drive your decision about whether or not you should open a store."

If you do want to set up shop, you should do whatever you can to learn about launching and running a traditional retail business before you do so. Get help from people who have experience operating brick-and-mortar establishments, for example.

Of course, if you already have physical retail experience, you probably have greater chances for success. Perisano, for instance, had established a background in retail prior to launching iParty Corp. In fact, he actually started Big Party, left the company-which later went bankrupt-and then bought the stores back.

Your best bet is to determine ahead of time whether a multichannel strategy is a good move for your dotcom. Because the dotcom-only model hasn't done too well, Perisano says multichannel is the way to go: "Anyone who has just a Web site, that wants to make a business out of it, needs to connect it to a retail reality. Anyone that has a business plan with a goal of e-commerce needs to augment that business plan with a retail reality. Unless you do that, you're not going to succeed."

Melissa Campanelli is a marketing and technology writer in Brooklyn, New York.

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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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