Before setting up a business in this modern world, one of the most important decisions you have to make is whether the business should be offline, online, or a combination of both models. A lot of factors go into play when making this decision, and these include the nature of your business and the available startup capital.
Both models have pros and cons, and you must consider every single one before making that decision. If you have already kick-started your business, did you make the right decision?
In this article, we will analyze the fundamental differences between the offline and online business models, using a supermarket and casino as a case study.
1. Startup Cost
Online businesses require little startup capital compared to offline businesses.
To set up a traditional supermarket, you’ll need a large capital to pay rent for the business sites, staffing, products, potential licensing fees, taxes, etc. Setting up an online store requires way less. With the right product idea, niche, and a hungry market, you can kick off the business in no time. Ecommerce platforms such as Shopify and Amazon have made setting up online stores super easy and cost-efficient.
Setting up a casino is very capital intensive. Several betting agencies have bypassed this obstacle by building an online casino business.
Setting up an online shop is relatively easy. Because of this, just about anyone can start one. This has led to market saturation over the years. The competition is tense! It is now harder to grab the attention of potential customers because a thousand other businesses are trying to do the same thing. An online store and casino would have to spend a considerable amount of money on marketing campaigns because of the tight competition in both sectors.
Many persons cannot afford to set up an offline brick-and-mortar business. Therefore the competition is way less tense. Supermarkets positioned at strategic sites will serve as publicity. Hence, there is no urgent need to spend large sums to grab people’s attention via marketing campaigns. The stores get organic foot traffic which will eventually translate into sales.
A casino strategically positioned in a lively city need not worry about competition. Because of the high startup capital, only a few persons can set up such a business, offline.
3. Growth Opportunities
E-commerce platforms can help your online business grow rapidly. There are hundreds of resources are your disposal to help with market and product research. This will ensure that you build your business around the needs of the market.
For offline businesses, opportunities for rapid growth are difficult to come by.
An online store can quickly grow from a simple webpage into a 6-figure business easily. For physical supermarkets, this is hardly the case. The success of these stores is usually gradual, but very stable.
Online businesses are much more exposed than offline ones. All thanks to the effectiveness of digital ads, social media, and organic traffic from search engines. Virtually everybody is a potential customer.
This is not the same for traditional brick-and-mortar businesses. An offline supermarket gets customers mainly from its immediate community. This may help foster community spirits, but it is not a very good traffic source.
5. Marketing and Advertising
This is a major advantage that online businesses have over offline ones. The positioning of physical business on strategic sites serves as a form of advert. Yet, the genius of social media and digital ads made online businesses the higher receiver of traffic.
Online marketing costs only a fraction of what it would cost in the physical world. The ads are target to the audience of your choice, and thus, most converts massively.
Online businesses an easily spy on their competitors to check out their winning tactics, and possibly outsmart them. It isn’t very pleasing to walk from your physical store to the business sites of your competitors just to spy on them.
The resourcefulness of the internet has made possible many opportunities that were non-existent a few decades ago. The possibility of opening an online store has so many benefits, but, yet, the offline business model still has its merits. Before embarking on your entrepreneurial journey, make sure you compare these models carefully. Study the market behavior of your chosen niche very well so that you can make an informed decision.