By comparison, there are relatively few costs associated with launching an online-only business, though there are some. If you’re not web savvy, you’ll need to hire someone to design your web page, which can cost several thousand bucks for a proper e-commerce site. It’s important to remember that you’ll also want to continue optimizing your site on a regular basis, so it’s not a one-time fee. Beyond that, you may also want to incorporate your company at some point to make it official. However, your main cost will likely be to manufacture or ship your product, depending on whether your site is acting as the producer or just the middle man. But of course, if you had a storefront, you would have to pay most of those fees as well, in addition to all the other costs of maintaining the space, which is what makes the online-only option so appealing to small start-ups.
“It’s a great testing ground where you can prove a concept and see if you attract press and customers without the huge overhead of a brick and mortar,” said Beth Schoenfeldt, the co-founder of Collective-E.com, an online community for entrepreneurs.
During the last decade, several companies have followed this model. Tree Town Toys, a kid’s store in Michigan originally started as an online-only site called Brain Power. And if you wanted to buy women’s accessories from Jenny Boston, you used to have no choice but to shop at JennyBoston.com; now there are three stores in the Boston area. Last month, the San Francisco Public Press, a non-profit news site, published their first ever hardcopy issue, a 20 page newspaper, after having spent the previous year as an online-only publication. Even Amazon, the biggest e-commerce site of all, may be soon venture offline. At the end of last year, the London Times reported that Amazon was planning a “surprise invasion” of brick and mortar stores.
All of this raises a larger question. Is it really necessary to have a physical store in a digital age?
According to Schoenfeldt, the answer depends partly on what it is you’re trying to sell. “There are many products like clothes that many people love to try on, or food products that they want to taste before buying. Things like cosmetics and skin care need to be, in many cases, sampled and tried,” she said. Even more fundamentally though, there is what Schoenfeldt refers to as the “trust” issue. There are still many consumers out there who “won’t buy online especially from a smaller company that they don’t know or trust.”
The Mediates sensed this issue when their business was online only. “There was definitely a stigma a few years ago when we first started out. People didn’t know if we had an office, or if we were just working out of our homes,” Tara said. One of the main reasons they ended up opening a physical store was because “it made us more legit and showed customers that we are a real company.”