Mixing & Matching – adding a new channel

One of the common suggestions I come across is for a retailer to expand either Online or into B&M if they are online only.   It’s an interesting idea and has some merit in that you expand your sources of income by expanding your services and reach.  However, there are some issues that most individuals who make the suggestions have not considered:

Focus

When you launch both an online store and a brick and mortar section, you actually double your workload.  Sure, certain things are shared (purchasing, accounting – maybe); but many of the tasks are very different.  With running any single side a full-time job (and more), you end up having to take shortcuts with either side leading to a lack of focus and efficiency.  It often is much more lucrative to focus on what you do best already rather than doubling your workload for marginal gain.

Additional Cost

There are additional cost to launching either side.  As an online store going to bricks & mortar, you have additional space requirements for  the B&M location, you can’t space your shelves as tightly or pack your games as firmly, you pay more per sq ft generally and of course, you have to pay for additional staff.  As a B&M store going online, you now have hosting costs for the website, additional box & packing material for shipping, additional time cost for shipping and box pick-up and an increase in customer service e-mails.  All of these add on to your work load, and often with minimal increase in revenue immediately.

Inventory Management

One of my constant nightmares is inventory management when you are effectively running 2 stores.  The question then becomes whether you seperate the B&M and online inventory (thus never allowing over-ordering) or you host a single inventory.  Now, hosting a single inventory sounds great – till you realise that it’s possible for a customer to walk up to your counter holding a game that was just sold online.  Now what? In either case, you are annoying someone.

Starting Over

Launching a website or a B&M store might garner you some additional sales from existing customers, but mostly you’ll just shift around how they order.  That might be fine for convenience sake on the customer’s part; but that obviously doesn’t provide you with new revenue.  As such, you end up starting over again having to build up new customers, new sales.  Sure, you might have some of the same infrastructure already but you’ve just added a bunch of cost without the revenue stream.

Competition

Competition is strange.  Sure, as an online store we compete indirectly with every B&M store in the world.  However, the customers who buy from us are often not the customers of a B&M store -they have different needs, different desires and vice versa.  Now, adding a new channel puts you in direct competition and you might find that you just aren’t up to it.  A B&M store might not be able to price well enough, ship fast enough to meet the desires of an online market.  An online store might not be able to provide sufficient events and game space for walk-in clients.  Having to compete on the same playing field generally means adding additional cost & procedures.  And if you refuse to play that game, you might not be successful at all – which then leads to the question of why bother?

Site hosting and other problems

We’re currently looking at shifting hosting which should significantly increase the speed of the site and deal with a few other issues related to hosting.  However, one of hte issues we recently located was that we are currently using 120GB of bandwidth a month, which is rather significant considering our new hosting limits us to 50GB!

So for the next little while, the site will be running slower as we log where all our bandwidth is flowing and then figure out how to fix it.  In addition, we’re going to keep major changes off the site  as the shift over might ‘lose’ our code.