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YOUR PLACE OF BUSINESS AND INTERNET

The place of business has always been an important consideration for all companies. Whether for the price, to reach your target customers, to be present in a selected market, to demonstrate a certain prestige, or to have access to the best resources (human, material, subcontractors, energy, financial, etc.), several elements must be considered when selecting your place of business.

But what is the impact of the Internet on these considerations? I would say that of all the "Ps" of the marketing mix, the place of business is among those most deeply affected by the web. Teleworking, online advertising, the development of an online marketplace, and effective and easy-to-use communication platforms (Zoom, Team, Skype, etc.), have all had a significant impact on the choice of the place of business.

Be accessible to your target customers.

When we look at this aspect, we must think about traffic. This is one of the main reasons why a business will pay a premium to be on a well-known commercial street, in a shopping center, or in a downtown office tower. But a recent visit to my neighborhood shopping mall, which is one of the largest on the island of Montreal, illustrates a change of mentality. With a high vacancy rate that is by far the highest in recent years, there are questions to be asked. The same goes for the number of vacant locals on Saint-Denis Street, Sainte-Catherine Street, Sherbrooke Street, and Saint-Laurent Street in Montreal (very well-known commercial streets in Montreal). There are of course economic problems, the pandemic, and the major renovation work on the streets of Montreal (Saint-Denis was having a major facelift when I went to see it for this article) and the competitive locations (the Dix-30 district seems to be working very well) which have an impact on the vacancy rate. But when we also consider the ever-increasing rental rate of industrial buildings, we notice a change. E-commerce has an impact on the needs of the place of business. The role of the store seems to be redefined. The transaction is increasingly done online, and retailers need a warehouse from which they can store and ship the orders more than a storefront where you can "cash and carry".

Certainly, there will always be a need for a physical presence. The famous "click and mortar" is a reality. The complementarity between the online and in-store experience is one of the reasons why physical presence will remain necessary. But to think that everything will return to the way it was before might be dangerous. For retail, the physical place should be seen more as a promotional center, rather than a profit center. The customer who does not know his/her size, who must have the product quickly, or who was passing by, will not be the one who will make or break the business unless this is your distinctive advantage. But their online voice can inspire people to consider this company for their purchases. Plus, just having a known physical address makes your business more credible, even if buyers do not stop by. Internet users will be the ones who will make your business a success, thanks to online shopping.

Perhaps the best example of this strategy is the "Apple Store" on Sainte-Catherine Street in Montreal. The store is almost always packed with people. Sometimes there is even a line-up. However, with the rent on Sainte-Catherine Street, the two glassed floors, the space layout, the fact that not all visitors are buying customers, and the employees needed to smoothly run the operation, the break-even point must be very high. It is therefore very likely that a significant part of this "showcase" is for online sales and to support the various Apple resellers.

Another example? I think the French retail chain Decathlon is doing a great job of positioning its physical presence to help online sales. In addition to offering the possibility of instore playing with the desired equipment (badminton nets are setup with rackets, ping-pong tables, bicycles on trainers, a golf green, etc.), there is an "experiences" section on their website which offers a lot of things to do in real life. Activities, advice, and of course, Decathlon has the equipment needed for the practice of your favorite activity! It is a great way to combine the virtual with the real.

We talked about retailers, but the changes also affect professionals from several sectors. Telemedicine is an excellent option for many healthcare professionals. The same thing for training companies; online courses are no longer the exception but are much more common than before. Same thing for accounting; online file sharing limits travel needs. Electronic signatures for important transactions, in short, the Internet is changing the need for the place of business.

Of course, manufacturing companies cannot reinvent production. The same with your dentist or your surgeon. There are several exceptions, but there are a lot of things that are done online.

With this new reality, do you need a full-time office? Or can you set up a professional space from your home to conduct your business? Can you have third-party storage and delivery service? If you can save on some or all your rent, you will come out on top.

Presence in desired markets

Selling internationally has never been easier! Certainly, there are still challenges to overcome, but from a business point of view, the world is within our reach thanks to the Internet, online advertising, and social media. In addition, several distribution companies allow some coordination for storing and shipping your products. Giants like Amazon, Alibaba and Alibaba Express, Walmart, eBay, Wayfair (home products), Costco, Target, and Rakuten, to name a few, can help with some or all of your marketing strategy, and distribution provided that the targeted regions are served by them.

And it is even easier for the service industry. Certainly, certain regions will have rules to follow. In addition, certain standards are different (accounting standards, for example), but for a multitude of sectors, teleworking or remote collaboration is becoming more and more accepted.

So, to be "international", thanks to the Internet, you need a good online strategy, impeccable customer support in the language of the region, and a local, fast, and efficient distribution partner.

Have a certain prestige

Yes, this aspect remains, but how far can you work on your high-end positioning with an excellent website? A good spokesperson strategy? In addition, who comes to visit you on-site? Most prestige clients have little time to travel; for the most part, you must come to them. Unless you offer an experience like a spa for example. Prestige is perhaps the "place" dimension that is least affected by the Internet because the change was already done.

Access to resources

For human resources, teleworking is growing tremendously. Why pay for a full-time workspace when your employees work part-time or even full-time from home and are more productive? To manage remote work, several applications are available. Same thing with subcontractors. There are aspects of your business that can be subcontracted, maybe to countries that have a significantly lower cost of living. A good organization of both the deliverables and the payables can help make this work. But certainly not for all aspects of your business and not for all businesses. There will always be functions that must be done by people on site, who understand the market, the way of doing things, the rules, etc. Also, there are companies whose mission is to create local jobs. For them, an internationalization of human resources is not an option.

For material resources, the Internet offers some benefits, but you mostly must be where the material is.

For the financial considerations, it depends. If you are looking for financing; several platforms are available online. But being in a country known by your donors will help. It may be more difficult to fundraise on a platform like GoFundMe if you are in Thailand and your clients and contacts are from North America. But it all depends on the amount of money requested. If your platform is Patreon and your subscription model is between $10.00 and $50.00, resistance will be less. If you are launching a new product, doing pre-launch sales to finance its development, and your price is, for example, $250, this might be more difficult if you are not in a "respected" region.

In terms of grants, there are territorial restrictions. Governments will encourage local entrepreneurship if the business creates jobs and has a chance of eventually paying taxes. This means that you must be at the location that offers the best grants for your business and plan to stay there for a while.

So, depending on the stage of your business, the price you want to pay for your place of business, and the type of company you have, the "place" dimension of your marketing mix can be greatly affected by the Internet.

If you have any questions or comments on this topic, please do not hesitate to contact me.

 

Stéphane Elmaleh-Riel, B.Ed., MBA
Marketing consultant