Offline Business Models Must Adapt… or Fail

Some people just don’t get it. Online advertising works, and those who realize they need to adapt to these changes are the ones who will succeed. When I visit my local mall, I continually see new stores opening up and going out of business just a few short weeks after. If they don’t go out of business, they are sometimes moving to different and smaller locations in the mall… but still getting the same result.

Two stores in particular that come to my mind are a small funny tshirt store and a replica jewelry stand. First off, the traffic flowing through the mall is dead… and I rarely ever see anyone shopping at these locations. Then you have the monthly rent cost, which we can guess is at least $1,000 to 2,000 a month depending on location. On top of that you have the inventory issues, paying a staff or if you are working the place, the time you are wasting just to break even. I just can’t see how either of these businesses are making money… and usually they aren’t.

What they should be doing is removing their business from the mall and bringing it online, it’s really so much more effective and will completely turn their business around! The problem is most of them simply don’t know how, or take the time to research it.

Years ago I bought a replica jewelry web site that was doing a few hundred dollars a month in sales. After I took it over I had it doing around a thousand a month. Not bad for picking up a site, improving the business model and creating some ad campaigns. Instead of having to hold inventory I also had a drop shipper for the site.

I was selling the same exact stuff (and more) that the kiosk in the mall is selling. The only difference is my product prices were lower, the process was nearly automated, and I didn’t have the insane renting costs they have to deal with each month.

I got focused on other projects and slowly moved away from the jewelry site, though it still gets a lot of volume and has some nice page rankings. I recently decided I would put some time back into the site and get it running again, but this time I would outsource the management of the site.

Since it’s been a while since I last ran the site, I needed to set it up with a new shopping cart system, and I decided to go with Volusion. They are one of the biggest and best names around for setting up an online store, and they have a great staff and can customize an online store for any needs necessary. They also have a cool infographic to help you choose the right shopping cart for moving your business or store online.

In all honestly, I can have the exact same products that a kiosk in a mall is selling within a few days, if not less. Through drop shipping and wholesale distributors online, it’s too cheap and easy to build your own store and business online. Instead of spending the few thousand a month in rent, put that towards an online store, affiliate program and advertising.

The point I’m trying to make is that the offline business world needs to adapt. There is a reason why more and more stores and businesses are going out of business. The days of having to sell products for half of the month just to make a profit are over!

Sure, people will always go to the mall and shop for the experience and buy clothing and food, but when it comes to so many other products, you can get much better discounts and deals online.

Keep the offline business model, but slowly progress and build a presence online. You will soon find that your online business starts to pass your offline model.

Is your business model focused only on offline marketing and transactions? If it is… you are missing out big time, and potentially headed toward failure.

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  1. Well said Zac.
    Could this be due to just volume? Everybody is spending their time on the internet at all times of the day. While the mall can have have fluctuations of volume do to many factors. Weather, time of year, etc.

    1. It could definitely be a volume issue. It also comes down to a matter of how many new people are circulating through the mall and just passing a store because they aren't interested and have seen it before. I'm sure these locations will do well during Christmas, but they are just dead in the off season.

      I used the two examples I in the post specifically because I know their concept and business would do so much better online. Selling tshirts online has become one of the biggest trends around, and the replica jewelry stuff does really well in different markets.

  2. Some malls still do quite well. Although if you were to compare their current volume to that of 3-4 years ago, it's probably significantly lower.

    I genuinely hope that a significant portion of little shops, whether mall kiosks or main street mom & pop operations, stay in business with their physical presences.

    I like to shop at real stores for many things. Sometimes no amount of reviews and customer feedback can make up for holding a product in your hand to feel it's quality or how it works for you personally.

    Many of them definitely do need to adapt in order to survive, and perhaps it falls on us in the online realm to help them survive in the physical realm. Not all online advertising has to lead to online sales.
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  3. Great post Zac and I agree whole heartedly. I think the majority of these people are stuck in that 1950's mentality. Oh my god online – no-one makes money online. Good luck with that ha ha! We all have ran into these type of people lol. They think the only way to make a living is an overpriced brick and mortar store who only service their local small community in most cases. Why do that when you can service the whole World for a tenth of the cost? These type of people need to get with the times or keep failing! When the going gets tough adapt of fail. Take that business online!
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  4. Right now i'm actually looking into using volusion for one of my clients websites. I'm also comparing it to 3D Cart and Ultra Cart as I'm slowly moving away from using shopping carts which are more for small to mid size websites such as interspire or zen cart.

  5. Hey Zac,
    As a fellow business owner I'd have to agree. Online definitely cuts the overhead. I just worry that the IRS sees money over here in the online markets…and are going to try and tax inter-state sales.

    What hit me the most is, "I didn’t have the insane renting costs they have to deal with each month." I have to agree with that, I may want some cheap office space for my business(really to get away from the endless distraction of the house and kids) but losing the insanely priced commercial overhead is a great advantage.

    What I personally thing the advantage of online marketing is, you get to find people actually looking for what you are selling. Verses having people pass by your kiosk and hoping they like what they see.

  6. The biggest problem facing such small independently owned stores that want to go online is competing with the big guys!

    For example, with places like Deals Direct (in Australia) selling all sorts of things from appliances, bedding, electronics, furniture, gym equipment, perfume, rugs, toys, through to wine – all at discounted prices and lots with free freight… AND an advertising budget that a small business owner couldn't possibly emulate…

    I wonder what chance the "mom and pop" jewelry store which moves from offline mall to ecommerce really has at attracting the right sort of buyer traffic in the first place… let alone build up some sort of customer loyalty in a price competitive market?

    Maybe they should stay in the real world and get AWAY from the shopping mall? i.e. find cheaper rent in local strip shopping precincts, provide professional customer service, diversify what they sell (not always possible in a mall as that is often dictated by the mall owners).

    Rather than try to set up a website as a sales channel, use it for marketing purposes… and spend some of your marketing money online in other places to attract real people to your real store.

    Taking your "store" online is not always a recipe for success 🙂

    If you are in this type of situation, it is obvious that you should do a lot of research before you take the plunge!

    Having said that… a local cheap clothing outlet (with three shops) has decided to close and conduct business entirely online. I wonder what her motives are for doing this, as it's an extremely bold move for a local business which on the surface "seemed" to be going reasonably well.

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  7. A lot small businesses don't realize how important it is to have an online presence and build a web site which can sell as much as your offline shop (in most cases more) but with a tiny fraction of the cost of a brick and mortar shop since as you said you don't to pay for the rent or for the stocking and your stuff, I really don't understand why so many businesses don't take advantage of the internet it's just not logical…

    Regards Kostas
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