A few years ago, online retailers seemed hell-bent on persuading brick-and-mortar customers to become exclusive e-shoppers. Who needs big-box formats and glitzy storefronts when a sleeker virtual shopping experience can be delivered on the cheap? The strategy is working: e-commerce sales grew 13% last year, compared with 5% in real stores. And yet a handful of e-commerce giants may be reverting to the past, filling empty stores with physical meccas for their brands.
Online processor PayPal recently announced plans to spread its e-payment tentacles into brick-and-mortar outlets to vie for in-store business that now goes to credit cards. And last December, its parent company, eBay, opened a pop-up store in London, inviting holiday shoppers to peruse e-wares in the flesh, from cosmetics and handbags to flat-screen TVs. Rather than paying at checkout terminals, customers first had to use their smart phones to zap an item's price tag. The phone's browser then either linked to eBay's online-payment section or to similar eBay products on the Web. Google has also opened pop-up shops to promote its Chromebook.
Industry speculation is that e-commerce king Amazon will also get physical with a store in Seattle. Analysts say it would showcase Amazon gadgets like the Kindle tablet, which in turn could drive sales of digital content.
The tactic is a page borrowed from the Apple playbook, which has married physically alluring stores with a sweet-talking sales crew to get customers off the fence. More than half the Macs sold in stores in 2011's fourth quarter went to customers who hadn't owned one before, according to the company. But impressive design, high profit margins and stuff that's inherently touchable are also integral to Apple's success story. Not so with e-commerce outfits like Amazon and eBay that sell any item imaginable.
"This is probably more experimentation than anything," says Sucharita Mulpuru, a Forrester Research analyst. These are companies "with plenty of money and a willingness to spend it to try new things." Or at least to try old things with better packaging.