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Better to Launch Online?

While online stores appear to have the low-cost advantage over brick-and-mortar locations, looks can be deceiving.

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This story appears in the March 2009 issue of Start Up.

Q: I'm thinking about opening a women's clothing store in the town where I live, but with everything that's going on in the right now, I'm afraid to invest my life savings in a that may not pan out. What do you think I should do?

A: In times like these, it's smart to be cautious. stores have high failure rates, even when times are good, and now that consumers have tightened their purse strings, startup retailers face even worse odds of success. One way to minimize your risk is to test your concept online before you sign a lease on a physical location, stock up on and hire staff. Not every retailer can test-market his concept online (think ice cream stands and nail salons), but a merchant selling clothes, shoes, bags, toys or gifts can quickly and inexpensively launch a website to find out what prospective customers want to buy and how much they're willing to pay.

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