Five MORE Differences Between Offline and Online Stores

Charles E. Crouch

© Charles Crouch 2004-14

A short review of Part 1:

Photo: Microsoft

While we’ve been building offline stores for thousands of years...

Fast Food Restaurant, Pompeii, 79 AD

Online stores are barely 20 years old!

Dell, circa 1996 Images: C. Crouch, telegraph.co.uk

When going online, we find that things are different. In part one we saw five ways offline and online stores are not the same:

Location

Construction

Size

Presentation

Personnel

Photo: C. Crouch

LocationOffline stores have a physical location that requires customer commitment in time and effort to go there, making them more likely to buy.Existing virtually where competitors are only a click away, online stores must work harder to acquire committed customers.

Photo: iStockPhoto

ConstructionOffline stores occupy physical spaces that require time, money and space to construct. Modifications are costly and done infrequently. Since it has no physical presence, an online store can be quickly built and new features easily added.However, skilled people are required to construct both store types.

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SizeOffline stores must be large enough for the merchandise, staff, customers, and inventory.Online stores are sized by bandwidth, processing power, and data storage. It is easier and faster to add size to an online store.

Photo: C. Crouch

Presentation

All merchants must display their offering to attract customers and encourage them to buy. In offline stores customers can use all their senses while making a purchasing decision. For an online merchant the main connection with your customers is through a screen, making the visual presentation even more important.

Photo: C. Crouch

PersonnelOffline stores must hire, train and manage staff for face-to-face service. Online stores also use staff to provide a pleasant experience, but they can work virtually from all over the world. In both cases staff require ongoing management attention.

Photo: C. Crouch

Here are five MORE ways offline and online stores differ

Data

Fulfillment

Payment

Security

Regulation

Photo: C. Crouch Photo: C. Crouch

Photo: C. Crouch

Offline stores get valuable customer data through personal contact. The feedback is immediate and follow-up questions can be asked.

Data

Photo: Microsoft

Online stores can gather vast amounts of data about their customers, often in real time. can be used to provide a customized experience for each visitor.However information overload is a frequent problem as too much uncoordinated data is available to make good

Fulfillment

Photo: C. Crouch

Offline stores must deal with physical goods requiring: • storage in good condition • attractive display • pick, pack, & delivery • customer

FulfillmentLike offline, online stores must attractively display theirgoods, but using a screen interface. Firms sellingphysical goods often need a warehouse with the sameissues of storage, picking, packing, shipping and returns. But online stores also must deal with...

VolatilitySince online stores are open 24/7, they can be subject to wide swings in order levels. This problem is compounded when they offer little or no information on availability and make promises for prompt delivery which they cannot meet.

Payment

Offline stores receive payment in several ways, cash and credit cards being very popular. Because sales staff can check the credit card and the person presenting it, the merchant’s exposure to fraud is limited.

Photo: iStockPhoto

Payment

Online stores frequently accept payments by credit card. Because the physical card is not present and all information is passed digitally, the possibility of fraud is increased, and higher processing fees are charged by card companies

Payment

With the growth of mobile, new payment systems are being introduced that combine ease of use with increased security. These may be used in both offline and online stores.

SecurityOffline stores use physical means such as guards, tags and alarms to protect both goods and the store itself.

Photo: C. Crouch

SecurityOnline firms may have to protect warehouses, but the bigger risk comes from the complex technology they use. Exposed to attacks from around the world, this technology can fail. Much of the value in online firms is the data they contain, making theft easier and exposing companies to massive loss and public exposure.

Photo: iStockPhoto

RegulationOffline stores are regulated by the body of laws and regulations which are applicable in their physical locations. In general these regulations will change slowly as governments and regulators usually act according to slower time frames.

Photo: Microsoft

SalesHQ

Prod.

Develop.

Phone

TestR&D

Online stores exist in a more fragmented virtual world. It is not clear who has jurisdiction over a firm which is split across many countries, often has no physical presence, and can change parts at frequently to meet changing conditions.

Regulation

Image: Ktrinko, Wikimedia

Putting it All TogetherRespect the differences between offline and online stores

Use them to your advantage

Keep your customers’ needs at the top of your store criteria

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Questions Comments and Suggestions?

Charles Crouchinfo@charlescrouch.com

CharlesECrouchwww.charlescrouch.com

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