Running Costs: eCommerce vs High Street
In recent years there has been a large decline in the number of actual high street shops that once upon a time dominated the UK's high streets. This has been due, in the most part, to the recent global economic recession which meant that people were simply spending a lot less money than ever before.
However, many people have blamed the rise of eCommerce, or online website stores, for the now fast emptying high streets.
So what are the main noticable differences in running costs between these online stores (eCommerce) and having an actual high street shop?
Unlike the high street shops, eCommerce websites can base their premises anywhere they like – drastically reducing the cost of rent on a property. Simply by moving out of your local town centre you can reduce your overheads by hundreds, even thousands of pounds, every month – this also accounts for the increased number of retail parks popping up around the country. By relocating out of town, these shops also have greater control over the energy suppliers and are more able to tap into green energy – again reducing the cost of operations.
Thanks to the reduced overheads mentioned above, the eCommerce website stores are able to pass on these savings to their customers as they don’t need such a high mark-up in order to make a profit. These savings are often passed on in the form of online discounts, with products sometimes being up to 10% cheaper than you’d find them in store and on the high street. It's these savings, combined with the complete ease of online shopping, that has driven more and more people towards building eCommerce websites.
Due to the nature of online shops and eCommerce, you do not have to take on as many staff to have a fully-working, organised web store. There is no need to hire anyone specifically for front-of-house tasks, as it is not a customer facing business – the closest you’ll come to this type of role would be telephone staff. It is this ‘bare minimum’ need for employees that has caused a huge increase in online eCommerce web stores, as anyone with a good idea and the cash to back it can start up a web store.
Hold more stock
As online stores can be based anywhere, they can be located in a large warehouse, or even a home garage which means that much more stock can be ordered in. By buying in in bulk you not only get a cheaper price per item, but you have more items available for purchase – so when all the high street shops are sold out of all their sizes, chances are the online eCommerce stores will still have them in stock.
Cost of shipping
The one area where high street shops are cheaper to run, is the cost of shipping. Beyond bringing the stock into the store, physical stores don’t have to worry about shipping products across the country or around the world. On the other hand, eCommerce stores will have to pay for shipping out to their customers – many retailors include postage and packaging costs, however some offer free delivery on products over a certain amount.
Looking at the pros and cons for eCommerce vs the High Street when it comes to running costs, we think it's quite clear to see that eCommerce is the better deal. But it's not just as simple as setting up a website and waiting for the cash to come flowing in. There is a lot of work involved, and an successful eCommerce store will take up just much time as would a high street store.
If you're interested in bringing your store to the online world, then get in touch with us for more details on how we can help you make that step.