How Do Stores Make More Money with Online Shopping or in Store?

E-commerce and online shopping have become such a significant portion of the retail industry that even brick-and-mortar stores have begun experimenting with ways to attract customers through online channels. While some may argue that all stores need to do is adapt and change with the times, there are some that have instead decided to embrace the digital revolution fully and in some cases, have even opted to close their doors.

So how do stores make more money with online shopping or in store? Let’s take a look.

Online Shopping Means More Sales

Thanks to the rise of online shopping and digital marketplaces like Amazon, it’s very easy for consumers to find exactly what they want and to be able to purchase it without having to go from store to store. As a result, online shoppers often have greater purchasing power than shoppers in a traditional retail setting and that can translate to greater profit for retail stores.

“The main way they make money is from the transaction fees and shipping fees that Amazon and other digital marketplaces charge. They don’t really depend on sales volume; they depend on marketplace sales,” said Paul Loehr, senior vice president and co-founder of retail consulting firm Retail Prophet. Loehr noted that most big box stores have increased their profit margins to account for the booming e-commerce sector and Amazon specifically.

In Store Marketing

Although traditional retail stores offer excellent in-store experiences for shoppers, marketers and store owners should not overlook the potential that online marketing and social media have to increase store traffic and sales. In-store marketing includes everything from in-store signage, packaging, and displays in order to attract shoppers to your store. Even further, marketers can use tactics like coupons and discounts online in order to gain more customers in-store.

Retail Prophet’s Loehr pointed to the Starbucks example, noting that the coffee giant has used digital marketing to a huge extent and has even used social media to encourage customers to come into physical stores and partake in special offers and discounts. “They’re getting consumers to come into their stores and purchase a coffee maker, mug, and then get a second mug for free,” he said.

Delivery And Logistics

E-commerce and online shopping have changed the way we purchase goods and services. One of the major differences is that when we purchase something online, we typically have it delivered to us at home. As a result, logistics and delivery have become significant costs for online retailers and marketplace operators. But instead of passing those delivery and logistics costs along to consumers, online marketplaces like Amazon have begun to collect those fees and charge them to the retailers that use the platforms.

Retail Prophet’s Loehr pointed to the rise of large online marketplaces with opaque pricing as an example of how Amazon’s logistics costs have increased due to the company’s size. “They’re handling huge volumes of goods, so they’ve had to invest in additional systems and people to keep up with demand,” he said.

Real-Time Marketing

Thanks to the rise of digital marketing and real-time marketing, retailers and brands can measure the success of their campaigns and promotions in real time. This allows them to adapt their strategy and measure the results of their campaigns and promotions more effectively.

Additionally, measuring marketing results in real time can help retailers identify which strategies and tactics are producing the best results, allowing them to iterate and evolve their approach accordingly. The marketing strategies and tactics discussed below all have the potential to help brick-and-mortar stores become more profitable as a result of online shopping.

Cross-Selling

Thanks to the digital revolution, retailers no longer have to be limited to selling one or two products at a time. With the ability to have a more expansive online presence and a fully stocked digital marketplace, retailers can sell a variety of products to consumers and increase their profit.

Retail Prophet’s Loehr shared an example of how Target used cross-selling to great effect. “They started out as a small brick-and-mortar store, but due to the emergence of online marketplaces, they decided to take advantage of that by creating a digital store where they could showcase all of their products,” he said. “That allowed them to increase their average order value and move more goods.”

Product Awareness

Product awareness consists of customers learning about a product or service before they even set foot in a retail store. Online marketing can play an important role in improving product awareness by connecting customers to a variety of sources and providing them with enough information to make an informed decision. As a result, retailers can grow their profit by selling more expensive premium brands or products that are unfamiliar to the average customer.

Product awareness can be improved through numerous tactics, including SEO, social media, and content marketing. With SEO, retailers can improve their organic search engine rankings and gain more clicks and leads. Social media allows brands to engage with consumers and promote brand awareness through paid and organic posts alike. And content marketing produces valuable, engaging content that can be repurposed across platforms and channels to increase product awareness and drive sales.

Location, Location, Location

Retail stores and malls that are located in desirable areas, near popular attractions, and near highly populated areas have the best chance of drawing consumers into their stores. Since customers have plenty of other choices for where to spend their time and money, retailers can improve their profit by focusing on creating a great in-store experience.

The retail industry has shifted to an online-first model where customers research and compare products and prices online before making a purchase decision. In this environment, brick-and-mortar stores that provide an excellent in-store experience have the best chance at drawing consumers into their stores.

Ultimately, changing times call for changes in business models. Some traditional retailers have embraced this change and have adjusted their approach by offering better services to customers or have decided to close their doors completely. But for those that are willing to change with the times or want to increase their profit, the digital revolution presents endless opportunities to do so.