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Why Ecommerce Is Eyeing Brick and Mortar

This story originally appeared on CNBC

Even as online shopping sales continue to grow, more e-commerce players are proving that the physical space should not be ignored.

Google recently opened its first-ever shop in London to sell Android phones, Chromebook laptops and other gadgets. Meanwhile, Amazon is reportedly exploring a new kind of retail vision to sell products in a brick-and-mortar setting.

But how does an online retailer justify the cost of setting up a brick-and-mortar shop? One solution is testing the waters with pop-up stores, where the retailer can experiment with a physical location without committing to a long-term lease. 

Frank & Oak, an online menswear start-up, has taken this approach. The retailer gained early success exclusively through digital platforms by amassing 1.6 million members, at least $15 million in funding and a partnership with Etsy. 

"A lot of people see Internet as next-generation and brick-and-mortar as being traditional. The way we see it is as a physical space that we can leverage to communicate our brand value," Ethan Song, Frank & Oak's founder recently said.

The company, which has several storefronts throughout Canada, is asking its customers to decide the location of its next six pop-up shops from 12 possibilities.

The stores are being designed more as experiences than just a place to buy clothes. Like their stores in Canada, which have barber shops and cafes, Frank & Oak's U.S. pop-ups will focus on creating a dynamic shopping experience.

"I think that when you think about our target market, a creative millennial, there's something there to create in the physical space," Song said.

According to Stacey Widlitz, president of SW Retail Advisers, pop-up shops are preferable to a long-term lease obligation—sometimes 10 years—which can feel like an eternity for a start-up.

"Warby Parker [and] Bonobos have both had success crossing the line, and then converting brick-and-mortar consumers to online," Widlitz told CNBC.

Of course, there's also the benefit of actually being able to touch and try on a product like shoes, apparel or glasses.

"Pop-up shops are the most effective way to test the retail waters and bring your product to the consumer in a low cost, short-term [way]," she added. "The test might also help brands realize they are actually not ready for the physical world."

Uptin Saiidi

Written By

Uptin Saiidi works for CNBC's "Power Lunch" and is a producer for's "The Starters," an online series covering innovative startups.