Costs

In general, opening a business as an online store is much cheaper than a retail storefront. Unlike a retail storefront, there is no rent to pay or other utility bills directly related to the store, except for web hosting and technical support. You do not have to decorate the inside of the store, purchase inside and outside signage or display units. Since you can manage the work yourself, you do not have to hire additional employees. With an online store, your costs are directly related to your website, shipping and accepting online payments. You must pay for your desired domain name and may pay someone develop your website and e-commerce platform, which can be expensive, but is less expensive than opening a retail storefront.

Inventory

A study completed by the California Institute of Technology found that consumers pay significantly more for products they can view in person. For high-value items such as designer clothing, antiques, jewelry, furniture and cars, a retail storefront will appeal more to customers and generate a higher profit margin on individual items. In addition to the price of items that you can sell, you must consider the number of items you wish to sell. A retail storefront will perform better for a business that sells a select amount of products, while an online store may work better for a business that carries an extensive selection.

Competition

Anyone who wants to open a business should examine the competition before jumping into the process. With an online business, the amount of instant competition is much greater than with a retail storefront. When you want to open a retail storefront, you can easily survey an area and determine what other stores are selling the products you want to offer or choose to open in a location where those stores do no exist. Online, there are usually multiple businesses selling the product you offer and many of them are already established, making it difficult for a new start-up to break in and find success. If what you are offering is not unique, then a retail storefront will be more successful at trying to earn new customers than trying to break into an already saturated online market.

Marketing

Building a customer base is one of the most-essential components of starting a successful retail business, online or offline. With a retail store, the potential customer base is limited to the surrounding area. Online, the customer base is vast. Once you open up a retail store, your options for attracting new customers are limited. You are confined to the retail space that you chose and changing logos, signs, shelving and the overall marketing strategy can be expensive. When you work online, changing signs and logos takes mere minutes and you can quickly and easily change the products that you sell and the way you present them on your website.