Clicks to Bricks: 5 Reasons E-Commerce Companies are Adding Retail Footprints

It may come as a surprise that one of the hottest online shopping trends is taking shape off the web. A 2018 report from real estate services firm JLL revealed a common clicks-to-bricks strategy featuring more than 100 of the top digital retailers who were opting for—or, likely, experimenting with—brick-and-mortar initiatives. The companies reported plans to open a total of 850 more physical locations over the next five years.

Despite the notion that physical retail is dying, e-commerce businesses of all sizes, particularly those with an established online presence, are looking toward physical locations, explains Taylor Coyne, JLL's manager of retail research.

“It's not that no one wants to shop in stores," she explains. “This trend is proving the opposite. We just want to shop in a different way."

According to the report, apparel and accessory brands comprise the largest clicks-to-bricks market; housewares brands come in second. As Coyne notes, consumers prefer to inspect items before buying, which leads to companies like online eyeglass retailer Warby Parker doing well with a physical presence. The JLL report cites it as one successful purveyor of this strategy.

Since opening a brick-and-mortar store in New York City's SoHo neighborhood in 2013, Warby Parker's footprint—both online and off—has expanded aggressively. As of June 2019, the brand boasts nearly 100 physical retail locations.

Here are a few reasons why e-commerce brands like Warby Parker and others are trending toward success with brick-and-mortar moves.

Customers Can Try Before They Buy

JLL found about three-quarters of clicks-to-bricks stores carry inventory. Alternatively, a showroom-only concept, in which customers can inspect, buy, and have shipped, works for others.

A RoadSHOP tour in two cities helped launch furniture designer and e-tailer Sixpenny's website. Featuring “a shiny batch of new Sixpenny goods," the concept allowed consumers to see and touch the handcrafted, solid wood-framed furniture to help compare with offerings from competitors. Sixpenny has since added another tour stop.

Engagement Opportunities Abound

Physical store locations can offer fun experiences. Coyne cites beauty and skincare e-tailer Glossier as a prime example—its pop-ups were decked out in millennial pink, with dedicated selfie spots that resonated with shoppers.

For StockX, which connects buyers and sellers of sneakers, streetwear, handbags, and watches, pop-ups began as a place for sellers to drop off and get paid for items authenticated on the spot. It quickly attracted window shoppers, explains Tom Woodger, the company's vice president for brand activation.

“That switched us to thinking this should be as much of a brand space as an intake space," says Woodger. “Now we immerse them in stories to instill that sense of who we are."

Exhibits have shared how the StockX authentication process identifies fake products and declines them. The company's first permanent space, scheduled to open in New York's SoHo later this year, will feature similar exhibits and help people experience New York culture by showcasing upcoming product trends, explains Woodger.

The location is within a few blocks of the Nike Lab and skateboarding shop Supreme, where StockX sellers may obtain merchandise they want to sell immediately via the website.

Temporary Locations Allow for Toe-Dipping

Many brands test a clicks-to-bricks strategy through low-risk temporary sites, which can inform more expansive openings.

StockX's first pop-up, which emerged a few years after the business launched, had a strategically short duration. “We opened just for the day around a Supreme final [new product line] release of the season in December," says Woodger.

“The audience was extremely receptive. The second we closed it, we were already planning another one in a larger space for a longer period."

Quick Launches Mean Quicker ROI

Pop-ups also accommodate short lead times. In fact, StockX's first one, with leaders choosing a space they knew, was rolled out in just a few days with existing staff from the authentication, operations, and quality assurance teams, Woodger reports. With more time, future pop-ups allowed for extras, such as easy parking, separate entrances for consumers, and UPS stops for merchandise pickups.

E-commerce businesses may need to be flexible on renting terms, says Sixpenny co-founder Jon Allen. “Some spaces only take rent, some take rent and product sponsorship, and some take rent and commission."

For permanent locations, JLL analysts are seeing growing lease term flexibility from landlords. “Some of these newer brands won't be able to sign without that flexibility," Coyne says.

Likewise, landlords are recognizing that trending brands may draw a crowd—a positive for surrounding retail spaces, she adds.

Opportunity to Better Understand Customers

In StockX's case, pop-ups inexpensively taught executives what they needed to know before opening a permanent location—particularly that pop-up visitors are attracted to them.

Metrics for StockX includes the number of people coming in, new members, and trades per day, says Woodger. The company has also compared holiday vs. low-season pop-ups, and is testing various promotion methods, from posting on social media to sending geo-targeted promotional emails.

Physical locations also expand business beyond core customers. Sixpenny's Denver RoadSHOP tracked sales on-site and via online codes given to visitors, says Allen. In the months it was open, the shop helped double the business' return on assets.

Clicks-to-bricks can also lead to increased product offerings. Coyne points to the luggage company Away, which became more of a lifestyle brand once it added weekend bags and toiletry kits. “Customers really begin to trust that product," she says, “and are more likely to buy something else down the line."

The clicks-to-bricks trend is expected to continue, particularly for businesses established enough to have worked out the logistics of e-commerce. More and more stakeholders are gearing up to strategize the search for a physical retail space—and, if all goes according to plan—both tenants and landlords will reap the rewards.