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. A brick and mortar business has a commercial address “made ofbrick 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 brick and mortar 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 to a brick and mortar business. 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 ...