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What do Amazon, Warby Parker and Rent the Runway all have in common? Each company began as a tremendously successful e-commerce store, that has since expanded to brick-and-mortar storefronts. Amazon has a physical bookstore in Seattle, while Warby Parker and Rent the Runway have developed retail locations.
The future of e-commerce might mean having a physical presence in addition to a website. Over the course of the last few years, about 20 online companies in the U.S. have launched a storefront, according to The Guardian. These storefronts allow said companies to continue marketing their offerings, build stronger relationships with customers and boost their traffic and sales, both online and in-store.
As e-commerce brands struggle to stand out from the crowd online, it may be time for your startup to expand offline. Before you rush into opening up a brick-and-mortar storefront, ask yourself these questions to make sure your e-commerce business is ready to make a smooth transition.
Do you want to open a flagship store, pop-up or showroom?
Your e-commerce business isn’t limited to existing as just one type of storefront. Here’s a quick look into the different types of spaces you may choose for your expansion:
- Flagship store: This is a physical storefront that is typically located in an area with high foot traffic. Shoppers visit with the intent to make a purchase and and leave with their goods. If you decide to go the flagship route, you’ll need a thorough understanding of where your store should be located. Consider your target customer demographics when deciding on the proper space and location. Ask questions about the surrounding stores, area, rent/leasing expenses and conditions before negotiating the lease with the building’s landlord or owner.
- Pop-up shop: One of the biggest perks to choosing a pop-up over a flagship is that it’s a short-term location. You’ll still need to meet with the landlord/owner of the space beforehand. However, a pop-up may be a solid bet for e-commerce startups that are not quite ready to leap into traditional leasing terms.
- Showroom: Customers may visit a showroom space, browse through sample products and leave with a plan to make a purchase later. This approach allows retailers to keep inventory and space expenses down.
Have you incorporated your e-commerce business?
You might have already incorporated or formed an LLC for your e-commerce business, depending on your offerings. If so, that’s great news! Your personal and professional assets will be separated and protected through the legal entity. Incorporating also provides entrepreneurs with credibility, which gives you a reputation for being a legitimate business.
However, if you have not incorporated your business and intend to turn your company into a physical location, it’s recommended that you look into the process. Consult a legal professional if you have questions about which entity is the right one for your business.
Does your storefront need any business licenses or permits?
No matter what kind of e-commerce website you have, once you decide to open a physical storefront, you’ll need certain types of business licenses and permits to remain operational. These will vary depending on your business, but here are a few common ones to watch out for.
- Basic business operation license. This license allows you to operate the business in your city, county or state, and is a basic must-have. Check in with your local city hall or Secretary of State before applying to determine what’s best for your business.
- Employer identification number (EIN). Do you plan to hire employees to work at the storefront? You’ll need to apply for an EIN, if you haven’t already. This federal tax ID number identifies your entity and ensures that your business collects payroll tax.
- Occupational license. This license depends on your industry and the type of work you do. Reach out to your state’s business licensing office before filing to make sure you’re applying for the proper license!
- Seller’s license. Some of the items you may sell at your storefront could require a seller’s license, which allows you, as the owner, to sell them for a wholesale or retail value. Be sure to check in with your state’s government office to see if you will need this license before you file!
How will you monitor your efforts?
As you add a storefront alongside your website, it will become critical to develop and study metrics that show the success of your efforts.
How can you do this for your physical store? Shopify recommends training in-store employees to ask customers how they found out about you. You can also track customers through use of promo and coupon codes that customers use in-store and run ads through social media sites like Facebook to determine which customers saw these ads before making their purchases.