Why are they doing it?
Moving offline isn’t admitting defeat but is instead just another way of gaining revenue, these companies say.
Just as an offline department store moves online to appeal to convenience, these businesses are moving offline to get their brand out in the open and increase sales. Having a physical presence with a customer service point solidifies the actual existence of the brand in customers’ minds, Walker says.
“Our view is that online doesn’t replace offline,” Cooper says. “We’re all for competition for the retail dollar, and one way we do that is by opening up offline stores in the same methodology that would see us go from offline to online.”
“Having the convenience of the online channel is great, but occasionally offline is more convenient for people, especially if they have a shorter buying window. The catchphrase here is multi-channel retailing, and it’s these type of retailers that are getting the most of the market.”
Walker also says moving into offline magnifies the probability of online purchases. If a customer sees a brand on a street front, they will recall that brand more easily if they see it more often and the two channels will feed into each other.
“This type of move is really about being available to consumers 24/7 and putting your brand out in physical locations so people will recognise you are a multichannel vendor, and are covering all your bases.”
Tony Nash says he could continue to operate Booktopia without moving online, and could increase the current $7.5 million revenue by just marketing with digital advertising, but maintains putting a brand in front of someone’s face will benefit both off-and-online sales.
“I think that for all businesses, whether you are offline or online, it really comes down to what your intentions are for the business and what you hope to achieve.”
“Are you looking for an exit to your business, or want to take it all the way? In the end, this really just comes down to what you see as the best opportunity for your business to grow, and it doesn’t matter if it was offline or online.”
Buchanan says RedBalloon’s move is definitely about. While she says the company is able to continue expanding on the internet, it would be ignorant to ignore the opportunities that can be harvested by using both the offline and online channels – each must use the other.
“We launched the gift cards in 2007, towards the end of the year, and that was our only extension into the offline world until recently. We decided there is a bigger opportunity here, and it’s all about taking advantage of the tangibility of the offline world. We are looking for the next big growth opportunity.”
“The biggest difference between online and offline is touch. The offline world opens up new opportunities in terms of giving people a more tangible gift offering.”
How do I do it?
It’s easy to start a website when you’ve already been selling in a bricks and mortar environment, as most of the retailing infrastructure is already in place.
But experts say moving from online to offline isn’t for everyone, and those that do embark in a real-world strategy must tailor their products appropriately.
Buchanan says businesses must have the right people, especially those who know the retail environment well. Recruitment could be necessary, along with an audit on the business to determine the proposed financial gain and how exactly the product will work.
“Offline to online is less risk, but this is much, much riskier. Understand the critical importance of stock management, logistics and merchandising. Maintain brand consistency. Make sure you have the same brand voice in the offline world that you have online.”
“It can be very expensive, and also if you’re going into using other retailers, if you’re going into another retailer or setting up your own offline outlet, its expensive and these retailers have massive cost pressures and they require quite larger margins and there have been hefty negotiations to ensure its financially sustainable.”
Cooper says one of the major factors required in a move to offline retail is experience.
“The industry is cutthroat, companies die every day and if you’re going to survive you need someone who is able to judge the market and determine whether something is a good move.”
Greenberg agrees, saying Cooper is “one of the pioneers of the industry… and he does have a large amount of experience”.
Nash also says businesses must choose their product carefully – don’t offer anything offline that you wouldn’t be prepared to offer online.
“The real challenge with the offline model, is that these are just two different operations but you really have to be certain about why you are doing it and what you are doing. If offline makes sense, then do that, but you have to be able to market and coordinate your offering well.”
Competition is also important to consider. Nash says his company would never move offline if it didn’t have a unique strategy, warning a physical bookstore would be too risky a move.
Instead, opening a unique feature to books like a vending machine attracts customers to the brand by offering them something new, which eventually points them to the website.
The problem, Nash says, is that Booktopia doesn’t have experience in offline ventures, so the company has had to branch out to consultants who have more experience. “It’s all about how best to grow the business, and we think this particular offering is the best way.”
Buchanan says RedBalloon carefully selected the gift-box strategy as a complementary service to its online offering. The boxes contain a gift card and a full product catalogue, which Buchanan says gives the customer a richer view of what the company offers, and thus points them to the site.
“We already launched the gift cards, but around Christmas last year we decided there was a bigger opportunity. Gift cards don’t really do the offering justice, and we were missing something to communicate effectively to the huge range of offers we were giving out.”
“We wanted to be sure we did this in a way that was reasonable. We had to take a number of decisions about what the product represented, what sort of risks we would be willing to take and consider our margins. We had to really test this out carefully.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
