A “brick and mortar business” is a term used mainly on the Internet to differentiate between companies that are based solely online, and those that have a real-world counterpart. Such a business has a commercial address “made of brick and mortar” where customers can transact face-to-face. The company might also have an online presence.
Of the many different business models such as e-commerce, home businesses, mail order, and brick and mortar, there are advantages and disadvantages to each. Some types of businesses are best served by, or even require, a hands-on base of operations to provide their products or services, such as auto repair and healthcare; and many companies benefit from augmenting this model with an online presence. But prior to the Internet, a brick and mortar business was standard for nearly any company that sold goods. Today, the business model is expanding to include e-commerce, in many cases foregoing the need of a commercial building all together. The reason lies behind the main disadvantage of a physical location for a business: overhead.
Overhead is the cost of doing business whether or not a sale is made. Commercial property, whether rented, leased or bought, adds considerable overhead. All else being equal, the cost of property, employees, insurance, and taxes are far greater for brick and mortars than for Internet-based businesses.
When e-commerce was new, however, some consumers were wary of doing business with companies that did not have a commercial address. This brings us to one of the main advantages of a brick and mortar business: customer security.
Many consumers believe a company isn’t as likely to fold overnight or disappear if it has a commercial base of operations. A physical storefront with a customer service counter and accountable manager served the traditional business model. The largest segments of all populations were raised with this model. Though the attitude is almost certainly relaxing, a business with a physical store location is still likely to pull weight with some consumers, even when shopping online.
Younger generations that have grown up with the Internet are less likely to have qualms as e-commerce has spent the last decade building solid reputations with the public. Online retail giants have helped to foster new business models, while other companies made virtual storefronts available to entrepreneurs by offering turnkey business solutions with nearly zero investment. The e-commerce business models eliminate the overhead associated with a brick and mortar business, and makes e-commerce friendlier and financially achievable for virtually anyone. Although the brick and mortar business model certainly won’t be fading into obscurity, virtual store fronts have opened a new world of opportunities for would-be businessmen and women with big ideas but little capital.
