Choosing a business format for three kinds of business

The three business formats

• Brick and mortar: selling only through physical shops or offices that customers visit.
• Click (pure online): selling only through a website or app, with no shop for customers to visit.
• Brick and click: combining physical stores with online sales, so that customers can browse, buy, pick up or return through either channel.

Factors that decide the format

The choice depends on: whether customers need to see, touch or try the product; whether the product is standardised or varies in quality; its size, weight and fragility (delivery cost and damage); whether it is tangible or intangible (an intangible can be delivered digitally); the need for advice or after-sales service; the target customers' comfort with online buying; and the costs of each channel.

(i) Shoes for walking and running

Suitable format: brick and click. Fit and comfort are personal, so many buyers want to try shoes on, especially the first time they buy a brand, and running shoes may need gait advice: which needs stores. Once the size and model are known, repeat buyers are happy to order online, where the range of sizes and colours is wider and prices are easy to compare. Shoes are light and easy to ship, and exchanges can be handled at a store. Combining both channels, try in store, buy online, or order online and exchange in store, serves both kinds of customer.

(ii) Household table and hanging lamps

Suitable format: brick and click (with a strong showroom). Table lamps and hanging lamps are bought for their look, finish, size, light and quality, which customers want to see switched on and touch; good ones are costly and bought infrequently, so buyers seek reassurance. A showroom meets this need. At the same time, an online catalogue lets customers browse many designs, check dimensions and compare prices, and many order online after seeing a sample. Because lamps, glass shades in particular, are fragile and hanging lamps need fixing to the ceiling and wiring, the firm needs careful delivery and installation, which a business with local stores and warehouses can provide. A small local maker could also succeed as pure brick and mortar.

(iii) Insurance policy

Suitable format: click (with advisory support). An insurance policy is an intangible product: it is a contract whose terms, premium and benefits can be presented, compared and bought entirely online, and the policy document is delivered electronically. Online buying lowers costs (and often premiums), allows quick comparison of plans, and supports online renewals and claims tracking. Complex products such as life or health cover may still need advice, so insurers add phone and chat support or agents: but a physical shop is not needed.

Conclusion

There is no single best format. Products that customers must try or examine favour a physical presence; standardised or intangible products suit online sales. For most consumer goods today, brick and click gives the best of both.