Online shops vs. high-street retail: What young e-commerce brands need to know

E-commerce is booming, and sales figures are breaking new records virtually every year. Does this mean that online retail is triumphing over high-street retail, and that local shops are no longer an option for growth? Contrary to what many people think, the battle is far from over.

In this article, we’ll explain the advantages of each sales channel and whether online retailers should consider opening a physical shop. We’ll take a look at potential synergies and offer you some practical tips to help you on your way!

Lead time: The essentials in brief

  • Online retail is growing and achieving higher sales growth than high-street retail. Nevertheless, at around 16 %, it accounts for only a small proportion of the total retail sector.
  • The main advantages of online shopping for customers are convenience, the ability to compare products and prices, flexibility and choice. Online retailers gain a better understanding of purchasing behaviour, can grow more easily and have lower costs.
  • The main benefits of high-street retail for customers lie in the shopping experience, the advice on offer, the staff on hand and the immediate availability of goods. Retailers can build stronger customer loyalty, create jobs and benefit from walk-in customers.
  • A multi-channel sales strategy capitalises on the strengths of both sales channels and opens up new opportunities such as improved service, click-and-collect, showrooms and stock checks.
  • Brick-and-mortar retail isn’t the right choice for every e-commerce business. It also depends on the type of goods, the financial resources and the location. Furthermore, it usually involves higher costs.
  • By carrying out a location analysis, implementing process control via an ERP system and adopting a multi-channel strategy, companies can lay solid foundations for business growth.

Are online shops driving brick-and-mortar shops out of business?

The statistics show that e-commerce is booming and experiencing incredible growth. A look at the figures reveals just how well business is actually going. Whilst online sales in 2015 stood at around 42 billion euros, by 2024 it had already risen to over 80 billion euros to.

Let us now compare the trends in turnover growth for online and high-street retail from 2019 to 2022. According to [...], high-street retailers are faring Federal Statistical Office significantly worse. Whilst e-commerce has seen growth of 31.2 %, brick-and-mortar retail has seen growth of just 3 %. Does this trend prove that growth opportunities lie solely on the internet?

To ensure we do not lose sight of the reality, another statistical figure is crucial. If we consider the retail sector as a whole, online retail accounts for only 16 % on that. Depending on the statistics and the survey, some institutes even arrive at lower figures such as 13,2 %. This means that local high-street shops are still the main drivers of sales. Even though the global and German markets are expecting even stronger growth in online retail in the future.

Online shopping has its advantages, but so does having a physical presence

Young retailers in particular, whose businesses are still in their growth phase, are often faced with a strategic question: should the focus be on expanding online sales – or is it also worth opening a high-street shop? Both models offer advantages – for you as a business and for your customers.

The strengths of one channel are often the weaknesses of the other. That is why we have set out a clear comparison of the key advantages of both sales channels below:

Advantages of online retail

Advantages of high-street retail

Convenience: Customers can shop at any time and from anywhere – without having to hunt for a parking space or queue. Deliveries are made straight to your front door.

Personal advice: Many customers appreciate having a knowledgeable member of staff on hand to answer questions, offer advice and demonstrate products in person.

Price and product comparison: Users can compare products and prices directly in the shop – or get a quick overview of the market. Well-structured product pages with images and descriptions help customers make a purchase decision.

Shopping experience: Shopping becomes an event – browsing with friends, touching products, trying them out and comparing them side by side. This sensory experience is hardly possible online.

Open round the clock: An online shop has no opening hours. Your customers shop whenever suits them best – even at night or at the weekend.

Trust & Loyalty: Personal contact fosters a sense of closeness and trust, and strengthens the customer relationship in the long term.

Customer data & insights: Customer profiles and analytics enable you to get to know your target audience better. This data helps you to further develop your product range and marketing strategy in a targeted manner.

Immediate availability: If you need a product straight away, you can take it with you straight away – with no delivery time.

Wide range of products: Whilst space is limited in the shop, you can, in theory, offer an unlimited number of items online. The only factors that come into play are your stock and delivery conditions.

Local contacts: Whether it’s an exchange, a return or a query – in high-street shops, you can get help straight away, without having to send an email or ring a helpline.

Lower fixed costs: Without the rental or staff costs associated with a physical shop, your cost structure remains leaner.

Local jobs: By setting up a local business, you will create additional jobs and boost the regional economy.

Customer reviews: Reviews allow buyers to get an idea of what others think of the products. Sellers, on the other hand, can use them to improve their products and services.

Walk-in customers: Unlike an online shop, which customers have to actively seek out, a high-street shop also attracts walk-in customers – thereby generating additional turnover.

Scalability: Your online shop is easier to expand than a high-street shop – this gives you the flexibility to tap into new products, target markets or sales channels.

Good to know: So-called ‘advice theft’ is often cited as a drawback in high-street retail. What this means is that customers seek advice in-store but then buy the item online at a lower price. Whilst this behaviour does occur, it only happens in about 10 % of the cases one.

Exciting: Conversely, this effect is now also evident in e-commerce. Around a third of customers first browse the online shop but then complete their purchase in a high-street shop.

Does it make sense to have a high-street shop to complement an online business?

There is no one-size-fits-all answer to the question of whether you, as an online retailer, should open a physical shop as well – as the decision depends heavily on your products, your target audience and your growth strategy. One thing is clear: an additional sales channel offers new opportunities, but also involves effort and risks.

Brick-and-mortar retail offers further opportunities for new synergies

By complementing your online business with a physical shop, you can combine the strengths and benefits of both worlds. More and more businesses are opting for this approach. We’re talking about the development of a multi-channel sales strategy. This simply means offering your goods for sale through multiple sales channels – for example, via an online shop, in physical retail outlets or on social media.

This opens up new opportunities to enhance the shopping experience for your customers:

Click & Collect: Book or order products conveniently online and collect them in-store – this saves on delivery time and encourages additional purchases in-store.

Online availability check: Customers can see at a glance whether the item they want is available at their nearest branch – this prevents frustration and unnecessary trips.

Showrooming: Customers can experience products first-hand, touch them or try them out – ideal for items that require an explanation or are of high quality.

Extended service: Complaints relating to online sales can be dealt with directly in-store – this builds trust and boosts customer satisfaction.

However, a high-street shop is not a sure-fire success.

As well as the opportunities, you should also take a realistic view of the challenges:

Costs: Rent, facilities and staff have a significant impact on costs.

Location: Is your target audience actually present in the area? Does your product range suit the local environment?

Competitive pressure: A high-street shop has to hold its own in direct competition with neighbouring shops – and that, too, requires effective positioning.

A high-street shop is only worthwhile if it is financially viable and complements your online business effectively – not if it consistently makes a loss.

When is it worth making the move into brick-and-mortar retail?

Expanding into brick-and-mortar retail is therefore not the right move for every e-commerce shop. It depends, in particular, on the products you offer. If you focus on a small niche and are highly specialised, a shop might not attract enough customers.

On the other hand, a high-street shop is particularly useful if your products offer a sensory experience. Customers love to try out and touch cosmetics, perfumes and even clothes. Even with expensive products or those requiring in-depth advice, the personal touch in-store can tip the balance.

Sound financing and a thorough analysis of the location are essential in this regard. Those who prepare well in this area can develop their business in a targeted manner – and successfully combine the advantages of the online and offline worlds.

Practical tips and strategies: Online and in-store sales.

Are you planning to expand your online shop to include a high-street shop? If so, it’s worth preparing thoroughly. These practical tips will help you lay the foundations for a successful multi-channel sales strategy:

1. Choosing a location: Finding the right spot is crucial

The location can make or break your shop. When choosing a location, bear the following criteria in mind:

  • Is your target audience present in the region?
  • How much are the rent, service charges and staff costs?
  • How well is the location connected – even for walk-in customers?
  • Are there already strong competitors in the local market?

A location with high footfall, affordable terms and the right target audience significantly increases your chances of success.

2. Optimising processes – with the right ERP system

More sales channels also mean greater complexity: orders, returns, stock, customer data – all of this needs to be carefully coordinated.

An ERP system such as collana diva now helps you to manage these processes centrally:

  • Track stock levels in real time
  • Processing orders automatically
  • Manage customer information in the integrated CRM system
  • Analysing purchasing behaviour and identifying trends at an early stage

This way, you can keep an eye on your key performance indicators and make informed decisions to drive your growth.

3. Connecting multi-channel channels in a smart way.

If you sell both online and in-store, you should make strategic use of the advantages of both channels:

Standardising returns processing: Accept returns across all channels – this will boost your customers’ satisfaction.

Coordinating product ranges: Showcase top-selling items from your online shop in your high street shop too – and vice versa.

Linking data: Use centralised customer data to deliver personalised offers across all channels.

Conclusion: A well-thought-out multi-channel approach boosts efficiency, strengthens customer loyalty and takes your business to the next level.

What is collana diva now?

collana diva now is a cloud-based ERP system designed specifically for start-ups and small e-commerce businesses. It is based on Microsoft Dynamics 365 Business Central and combines tried-and-tested ERP functionality with practical extensions for online retail. collana diva now It is easy to use, quick to implement and helps you to manage your processes efficiently and build a scalable business.

What is the difference between collana diva now and Business Central?

collana diva now It specifically extends Business Central with sector-specific functions, automated processes and pre-configured workflows. At the same time, the solution is significantly easier to use and is optimally tailored to the needs of growing online retailers.

Microsoft Dynamics 365 Business Central is a powerful ERP platform – but it is not specifically designed for e-commerce requirements.

Can I add add-ons, licences and clients at a later date as and when required?

Yes, at any time. Users, clients and modules can be flexibly expanded. This way, the system grows collana diva now grows with your business, without you having to commit to rigid licence packages.

Why do I, as a start-up or growing e-commerce business, need a professional ERP system?

Because centralised management, scalability and reliable data are essential for success in e-commerce – particularly during the growth phase. You need reliable processes, transparent data and the ability to scale up quickly. With collana diva now You’ll lay the ideal foundations for this.

How long will it take to launch collana diva now?

The introduction of collana diva now is implemented much more quickly than with conventional ERP systems. Thanks to predefined processes, e-commerce expertise and a structured project methodology, the system is usually up and running within a few weeks – so you can start reaping the benefits straight away.

collana diva now is the ideal ERP solution for small and medium-sized enterprises, as well as start-ups, that wish to digitise their business processes efficiently and grow strategically. With this cloud-based software, you can keep track of key performance indicators at all times, streamline your processes and establish a solid basis for decision-making – whether in product range planning, stock management or order processing.

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