Don’t feed the Piranhas – Why SMBs should embrace technology

Amazon enjoyed Christmas. Were small retailers food for the piranhas?

It was a lackluster holiday season for the major retailers in 2013.  According to Wall Street Journal’s Market Watch, in-store foot traffic decreased as much as 21%.  Overall sales were up slightly at around 3%, though, driven by increases in online shopping that swamped UPS and FedEx in the last days before Christmas.  Here’s an interesting graph from Bloomberg Business Week that tells the story well:


Online and Instore shopping comparison was a major beneficiary of the online purchasing blitz, adding 1 million members who enrolled in their Amazon Prime program in late December to take advantage of free 2 day shipping (and undoubtedly adding to the shipping snafu).  Other online retailers also reported strong showings, including some smaller online concerns.

Where does this leave brick and mortar businesses? If Amazon took a larger piece of the holiday pie in 2013, does this mean that business that once belonged to SMBs now feeds the piranhas? Typically, there are no hard results for SMB retailers beyond some positive PR for the American Express-sponsored Small Business Saturday.  In a previous blog post, I’ve already expressed a few thoughts about Small Business Saturday and the need for a continuing positive message stream about the value of small businesses to the U.S. economy.  I suspect that some traditional SMB retailers were at least nibbled by the dreaded Amazon fish, but others may have actually benefited from online sales. That’s the tangent I’d like to take today.


Joining the Online Party

Lacking data, I decided that I would use sophisticated scientific methodology and conduct some research of my very own. I called one of my old print customers, Mallory Arnold, at The Sugarplum Tree, an established children’s clothing boutique in Perry, GA. (Author’s note: Perry happens to be the best small town in the known universe and The Sugarplum Tree has the cutest children’s clothes anywhere.) Sugarplum Tree has operated a web storefront for several years. They use email marketing and Facebook to attract customers to the website and the strategy is working well. Christmas season sales were up this year and website sales were a significant contributor, according to Ms. Arnold:

I haven’t run a year-to-year comparison, but our online sales were good. We’ve brought in customers from all over the country, and we’re shipping something out every day.  We had a huge influx of orders for our after Christmas promotion.

It’s what I expected to hear – small businesses can and do participate in online selling and technology really shouldn’t be a problem any more. There is absolutely no reason why even the smallest brick-and-mortar retailer can’t have an online storefront. DIY storefronts like Shopify or BigCommerce are very affordable, and you can even set up limited e-commerce on a Weebly website.  If you’re using WordPress for your website, there are a host of plug-in options that will allow you to add a shopping cart, some of them, like Woo Commerce, providing a massive array of options and capabilities.

It would be great to draw the conclusion that most small retailers are over this hump and have an active online storefront that contributes to daily sales, but your humble author suspected this was not the case.  I decided to continue my highly scientific research with an informal survey of downtown merchants at the center of the universe.  There are about 15 small retailers on Carroll Street, Perry’s  main shopping district.  Of these, I only counted six with functioning websites. A couple of others have Facebook pages, but I could find only The Sugarplum Tree and one other shop with e-commerce capabilities.

While the results of my pseudo-scientific survey can certainly be questioned on the basis of statistical validity, the conclusion seems self-evident. E-Commerce should be a mainstream effort for small brick-and-mortar retailers, but many aren’t there yet. The cost of implementation is certainly affordable and if Mallory Arnold’s experiences this year are indicative, it shouldn’t be difficult to measure ROI on the investment. Let’s face it, e-commerce technology is over a decade old – ancient history by today’s rapidly moving standards.  Small retailers who haven’t climbed on the boat may be swimming in dangerous waters.

On the Horizon

Where’s the boat going? Technology continues to move at light speed, and large companies have an edge. From a marketing viewpoint, online retailers like Amazon have a particular advantage that comes from operating in what is essentially a “closed loop.” All of their business is generated online and can be tracked and measured, allowing them to optimize their tactics continually.  Brick and mortar retailers without e-commerce capability lack this ability to measure – they don’t know who will walk in the door next and what they will want to purchase.

For small businesses, collecting and measuring marketing data can be a real challenge, but there are some technological innovations on the horizon that could literally change the landscape. Marketing automation will soon be affordable for small businesses. New transaction solutions may allow for easy data collection and eventually eliminate the credit card. Apple has been quietly introducing ibeacon, a small transmitter with the potential to completely transform the shopping experience – it can connect via Bluetooth to a customer’s smart phone, tracking in-store location, transmitting product information and coupons, and even completing the transaction using PayPal or a similar service. I’ll write more about this cool and somewhat frightening possibility in a future post.

Obligatory Piranha PhotoSure, small business owners tend to fly by the seat of their pants, and the resulting innovation has grown some really successful businesses.  This kind of navigation can succeed, but it can also be dangerous. The shift away from in-store shopping this Christmas season should be a wake-up call for small retailers who haven’t adopted mainstream technology. Brick and mortar on Main Street has never really been enough to assure success, and small businesses that market and sell well have always had an edge.  Today, technology is increasingly important to a small business’ ability to market and sell, and it may be the line between success and failure. Increasingly, smart business owners who learn to use technology to navigate, to market and to sell who will be the winners. The rest may become food for the piranhas.

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