Brick-and-click: The tricky balance between online and physical stores

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  Quantumrun Foresight
• November 22, 2023

Insight summary

Autonomous painting robots are revolutionizing the manufacturing and construction sectors by using 3D perception or digital twins for precise painting, reducing costs related to rework and overspray. Health and life insurance companies are turning to blockchain technology for secure, reliable data sharing, reducing administrative costs and fraud, while also empowering policyholders. The "brick-and-click" business model combines physical stores with online platforms, providing flexibility to consumers and resilience to businesses. The model has gained traction in emerging markets like the Philippines, thanks to the widespread use of mobile wallets, and suggests a need for nuanced regulation in the e-commerce sector.

Brick-and-click context

Brick-and-click businesses may also offer options like in-store pickup of online purchases or the ability to return items bought online in a physical store. The term "brick-and-click" emphasizes integrating traditional and modern retailing methods. It also allows businesses to reach a wider audience and cater to different preferences.

In 2019, Euromonitor International conducted a study that revealed a shift in retail trends in the Philippines, with many businesses setting up online channels through direct selling on Facebook Marketplace and utilizing third-party channels like Lazada and Shopee. The COVID-19 pandemic lockdowns led to a significant increase in electronic fund transfers (EFTs), resulting in a 31 percent increase in retail industry sales by the end of 2019. Less than 2 percent of the Philippine population owns a credit card, but mobile wallet services are already used by 40 percent. As a result, the Philippines is now considered one of the fastest-growing e-commerce markets in Asia.

According to a 2022 study published in IISE Transactions, incorporating an online platform produces abundant data on customers' inclinations towards specific goods, such as through feedback shared by online customers. This valuable insight can be leveraged to enhance the accuracy of demand projections. In cases where fixed costs are moderate, the retailer gains from integrating an online channel under differentiated and uniform pricing strategies. 

Disruptive impact

According to a 2021 study published in the Electronic Commerce Research and Applications journal, the presence of a physical store enhances resilience and reduces risk. Pure-play online retailers face a bankruptcy risk 1.437 times higher than brick-and-click retailers. Moreover, businesses opting for internationalized e-commerce ventures are more likely to survive. Local players face a bankruptcy risk 2.778 times higher than internationalized firms that engage in import and export e-commerce activities.

Many entrepreneurs will likely start online due to the low operation costs, giving more opportunities for startups to establish e-commerce platforms and payment solutions. Customer reviews will increasingly become essential, and e-commerce platforms will likely create a user interface that prioritizes giving feedback or ratings. International e-commerce firms may also start building physical stores in key global locations that target their brand image or shopper demographics.

As this hybrid business model continues to grow, there will be more need for regulations that address e-commerce complexities. These policies can include comprehensive taxation (or exemptions) and consumer protection. Mobile wallets will also become more competitive as new entrants join the market, especially in developing economies like Southeast Asia. Crypto payments may also become more relevant in these areas.

Implications of brick-and-click

Wider implications of brick-and-click may include: 

• Increased social interaction and engagement with customers. 


• More economic activity and growth by providing customers with a wider range of products and services. This model can also increase competition among businesses, leading to more competitive prices and better deals for customers.


• Increased tax revenue for local and national governments. Additionally, this model can facilitate the growth of small businesses, which can be an essential source of economic growth and job creation.


• People in remote or rural areas having greater access to products and services, helping to bridge the digital divide and increase economic opportunities for people in these areas.


• Brick-and-click businesses requiring significant investments in technology, including e-commerce platforms, digital marketing, and customer relationship management systems. This need can lead to the development of new technologies and innovations in these areas.


• New jobs in e-commerce, customer service, and digital marketing. This model can also increase demand for skilled workers in data analytics and digital strategy.


• Reduced emissions and a lower carbon footprint, particularly if physical stores are minimal and online channels are powered by renewable energy sources.


• A better exchange of ideas, products, and services across different regions and cultures.

Questions to consider

• What is the most convenient feature of brick-and-click businesses?


• How do you think this business model will evolve further with more advanced technologies like virtual reality?