Running a business: physical vs online

10th April 2019

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People buying handmade items enjoy finding out about who made it, and how. That, says Claire Hender, is why she gives up 10-12 weekends a year to sell her Little Storm jewellery at some of the many different craft markets across London.

“It’s definitely good to meet people face-to-face, particularly with my kind of business. It helps if they like you and buy into you, as well as the things that you are making. The cult of the maker is quite strong at the moment. People love hearing about how you made things. That’s why it wouldn’t work so well just online.”

She is one of many entrepreneurs weighing up the costs and benefits of having a physical presence. Online shopping now accounts for almost 20% of total retail sales in the UK. At the same time, Britain’s high streets are struggling to attract shoppers, meaning that many entrepreneurs are choosing to be online only.

Steven Drew, head of product at Informi, an online community for small business owners, says opting for online only reduces the risk of setting up a business. “It creates an opportunity for people to try things without having the need for huge capital outlay or having huge investment behind them. Anybody can do it. There are facilities to set up a website; you can create an online brand; there is software which enables you to deal with your accounts.

“All of this is relatively cheap, so if you’ve got the right idea and you don’t genuinely need a physical presence because of the service you’re providing, online makes absolute sense.”

The pros and cons

Cost is a big barrier for small businesses that want a physical presence on the high street. Those looking to rent a property may have to enter into long-term agreements; there are business rates to contend with as well as staffing costs.

Marie Sharman-Forgue is an accountant based in Brighton, who has opted to be online only. She says: “It’s more convenient, there are a lot less overheads. To start with it’s a good solution.”

She enjoys the flexibility of not having an office. “My hours are more flexible than office hours. Often my clients email or call me in the evening or on the weekend and I deal with them then. For me my business is 24 hours, seven days a week.”

She meets clients at their home or office, which can be more convenient for them; or in her own home. Some professional service providers might be concerned that having meetings at home could appear unprofessional. Marie says that has never been an issue. “Every time a client came here to discuss their needs, they’ve always given me the contract.”

On the other hand, retailers that have chosen to only have an online presence do miss out on the visibility of a high street shop and the opportunity for walk-by traffic.

High street shops can also provide additional services – a bike shop might offer repairs; experienced sales assistants can give buying advice. Steven says: “The experience of going into a record shop and talking to people who might share ideas about other records that you could buy, that is difficult to replicate online.”

A third way

For makers, craft markets offer a third way. They are cheap – Claire pays between £50 and £100 for a day at a market – and do not incur any of the long-term costs of having a physical shop.

Claire smiles on the left-hand side of the photo, in a patterned cardigan. The right-hand side shows an example of her jewellery and packaging.

They do require a fairly large investment of time. Claire says: “That’s definitely the bit where you feel like you’re maybe not getting the return. The actual price of the market, if you make a few sales, that’s covered; but the time you spend is quite extensive. You have to get ready for it in advance and it’s a full day standing there.”

She says there are upsides. “That can be quite fun as well; it’s not all bad. It can be a bit solitary doing the making on your own at home and very rarely seeing anybody else of that kind. It’s nice to be part of that bigger community at the events that you go to.”

She also sells her jewellery in a few shops, on a sale or return basis, and is exploring her options for selling wholesale. “That usually means you get a lot less money. I need to develop some products that would get me enough money even if I’m selling at a lower price.”

Claire set up her online presence at the same time as starting to do markets and says both strands are very important. “The website and the online shop are vital for selling to people who don’t want to make the commitment to buy face-to-face at the market that you happen to be at.”

Then there is the online version of walk-in trade. Claire says: “People stumble across you, that have never met you; people from abroad, or wherever. The reason the online presence is important is that your website is your 'shop' for the rest of the time when you’re not doing events.”

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