When thinking of how best to build your business, a significant consideration these days is whether to make it offline or online – especially, of course, if the business idea you have in mind is in the retail industry. Each option has its ups and downs, so you need to contemplate it very carefully.

In the digital era, it seems easier to build an online business because of the advanced technology (and of course, the promise of cheaper overhead costs). But that doesn’t mean brick and mortar shops have lost their merits.

For those of you who are about to build your very own business, here are some points to consider before deciding which type suits you best.

If you want to build a brick and mortar shop

Increased credibility and trust from consumers

An offline store looks and feels credible. Whether or not customer behaviour is rational, the presence of a physical location has the advantage of more readily gaining trust. People know that the business is physically present should there be any issues with its goods and services. Besides, who hasn’t heard of fraudulent online sellers? There are also certain products that customers would want to check directly before purchasing, such as cars and electronics.

Higher capital and manpower cost

However, when it comes to brick and mortar shops, keep in mind that you do need to spend a lot more money on its infrastructure and upkeep. You also need to spend money on manpower, such as a manager or supervisor and a few people as staff. In addition, you will need to take care of paperwork ranging from operating license to legal documentation so you can legally run your business.

If you prefer online business

Today’s age offers many possibilities for online enterprises. Not only do they offer advantages for the customer, they also benefit owners.

Lower overhead costs

As most would already know, online stores and digital businesses are relatively cheaper than offline businesses. You don’t need a physical location as everything can be handled through the Internet. Many overhead costs (rent, maintenance, utilities, total salary) can be cut by having your business move online. People can simply shop from anywhere in the world and wait a few days until their order arrives (that is, if the online business offers international shipping!).

Reliance on internet connectivity

However, online business relies on Internet connection and a functional platform (your business website or mobile app or social media page). If your company’s online medium slows down, has issues, or is frustrating to use, your business will suffer.

No fixed operational hours

Moreover, online business has no set operational hours. Some people find this an advantage, as they can respond to customers anytime and anywhere. But bear in mind that in the digital age, everyone is impatient. Your social media page might be scrawled with complaints if your response is an hour late.

As you can see, whether you build an online business or an offline one, each has its pros and cons. What usually happens these days is to start with an online business. When your company has become more recognized and has started earning profits, you can plan its expansion to a physical location. In fact, many, if not most, successful businesses are a mix of online and offline. Good luck in your business endeavours!

This article was written by Funding Societies, the first SME digital financing platform in Malaysia. We provide working capital financing for small and medium-sized enterprises (SMEs); we also offer investment opportunities with returns up to 14% per year. To learn more about us, click on our website here.

You can also see our up-to-date progress and statistics in Southeast Asia here.